Sustainability Report 2019

Actively Transforming the Energy System EPH Sustainability Report 2019 Contents Introduction 1 Materiality Analysis 4 page 4 page 100

About this Report 2 Environment 5 page 38 page 110

EPH and its Business 3 Governance 6 Social 7 page 48 page 170 page 194

Assurance 8 page 222

Annexes 9 page 228 5

Introduction FOREWORD 6 PART 1 7

Dear Stakeholders,

It is my great pleasure to introduce you to the fifth Sustainability Report of Energetický a průmyslový holding, a.s.,

which covers the 2019 calendar year. EPH’s often vitally important not only in their energy the last 5 years, EPH invested more than alongside with Biomasse Italia and mission is to provide energy infrastructure supply role but also socially and regionally. EUR 1 billion into zero or low emission power Biomasse Crotone acquired in the past. services and energy commodities, both vitally Hence, in decarbonization, we strive to seek plants (primarily and CCGTs). We have Further, we have acquired Kilroot and needed to our customers and businesses real solutions–not merely offloading but truly voluntarily put into strategic reserve or even in . But not only this. We provide decommissioning the carbon-intensive fully decommissioned several gigawatts of Ballylumford power plants in Northern the energies in a very responsible way and sources while investing and actively converting -fired capacity. Coal resources now account Ireland, Tynagh Energy Limited, a natural efficiently, so they remain affordable. In our plants to low-carbon or fully renewable for only around 11% of EPH’s consolidated gas power plant in the Republic of Ireland, everything we do we apply stringent criteria sources. financial results in terms of EBITDA. Compared and a portfolio of both conventional and of responsibility along the following four to 2013, the measures we implemented renewable power plants in from dimensions: quality and security of supply, Contrary to often oversimplified demoting resulted in the reduction of 18 million tonnes of . social aspects, regional aspects, and of critically needed, socially, and/or regionally CO2-eq emissions per annum. I am proud that environmental protection. essential operations, the real transformation EPH is one of the leading players in the real is delivered not only via investments and decarbonization of conventional power plants. As of today, EPH is already consolidating 0.8 With decarbonization efforts, new technologies, implementing new technologies but also by GW of renewable resources. On top of that, and the transformation of energy systems, careful management of sensitive processes within its equity participations it operates In 2019, EPH increased its net installed the above-mentioned dimensions -security important to regions, society or for energy another 1.6 GW of renewables and 0.9 GW of supply, social and regional aspects, and systems. power capacity by 1.7 GW: added 2.0 of storage capacities to support the grid in environmental protection- are becoming ever GW in , 0.3 GW in renewables, accommodating more renewables. EPH also more important. Our role is to participate As a result of our undertakings, the carbon reduced higher-emissions capacity owns a significant fleet of zero-carbon and low- actively and contribute to energy transformation emission intensity of our generation has (coal and oil) by 0.7 GW. In particular, carbon power plants. We further invest in the while carefully balancing the dimensions of decreased significantly in past years, and we development and growth of a sustainable and we finalized the acquisition of a biomass responsibility. The energy assets we operate are are committed to proceeding further. Over secure supply of electrical energy, heat, and power plant Fusine that will be operated natural gas to our customers. FOREWORD 8 PART 1 9

We do not merely offload but truly decommission carbon-intensive sources, actively converting them to low-carbon or fully renewable plants.

Our efforts are built upon the following three pillars: the development of renewable power generation As a key player in the Central European To conclude, I would like to personally in the former areas. To support this, energy infrastructure and power generation, thank all our employees, investors and 1. Provide real decarbonization solutions we established EP New Energies, a subsidiary we are conscious of our substantial business partners, who have been for existing assets that we own or we may specialized in renewables development responsibility for enhancing energy security yet acquire to transform them in the most targeting gigawatt-scaled potential for wind, and sustainability. In 2020, we approved our supporting us in fulfilling our main appropriate and socially responsible way. For solar and hybrid projects that we have on our new sustainability-related policies on Group business objectives, providing energies instance, we are building one of the biggest land plots in . We are determined to level: an Environmental, Social and Governance and reliable energy infrastructure at battery storage facilities in Germany; we have continue increasing the share of renewable and policy framework, a Code of Conduct, specific prices favourable for our customers. massively invested in modernization of our carbon-free generation in our portfolio. Environmental, Operational and Responsible Our sustainability commitment aims cogeneration fleet or already-mentioned coal to Procurement Policies. biomass or gas conversions. This area includes, 3. We also massively invest in infrastructure to continuously improve in all fields of among other things, the recent acquisition of to further strengthen reliability and security We issue this Sustainability Report at our activities to the benefit of all our a conventional fleet of Uniper France, assets of supply, increase efficiency and implement challenging times affected by the coronavirus stakeholders. relevant both from the energy systems and state-of-the-art technologies. Investments in outbreak posing remarkable challenges for regional perspective but also under the decision better interconnections and strengthening of the society. I am glad that we had a chance of the French government to phase out coal the European natural gas market demonstrate to substantially participate in a large-scale generation. our support to natural gas, which is crucial for humanitarian aid providing vital medical gradual decarbonization of power generation supplies to hospitals and healthcare facilities, 2. We invest in renewable power generation, in Europe. A new compressor station we municipalities and others in need especially in especially into more complex, dispatchable construct will increase the capacity of natural and the . technologies as the area of mainstream, gas transmission through Slovakia. Completion intermittent renewables such as onshore of a feasibility study on the Eastring pipeline will EPH is taking -and will be taking- an active role wind and photovoltaics, both already well contribute to maintaining the security of supply in transforming the energy system. Through addressed by many infrastructure and pension and support the decarbonization. We also the above-mentioned pillars of our efforts, we funds. For example, we invested in continued works on a strategic project of the contribute in a very responsible and balanced conversion in the UK, in biomass power Slovak-Polish interconnector, which is on the list way. We remain committed to reliably delivering generation in , we acquired a biomass power of critical European infrastructural projects, with energies and energy-related services to our station in France as a part of the former Uniper expected completion in 2021. customers while being a leading player in true, France portfolio. We also intensively work on socially acceptable decarbonization. Sincerely, Daniel Křetínský chairman of the board of directors 10 PART 1 11

Taking genuine responsibility stands for seeking applicable solutions. In EPH, we are committed to both tackling global challenges and satisfying people’s needs. We believe it is their sustainable fulfilment that creates a fertile ground for any structural change.

consolidated assets total energy production

Actively € 16.7 bn* 37,684 GWh

Transforming employees electricity from renewables the Energy System 11,453 3,388 GWh

heat from renewables

220 GWh

Vineyard Wolkenberg, recently grown on LEAG’s recultivated areas with Schwarze Pumpe power plant in the background. Inaugurated in 1996/1997 the 1,600 MW lignite power plant has set new standards in terms of efficiency and environmental protection. (*) This data has received limited aasurance from the independent auditing firm KPMG. INTRODUCTION 12 PART 1 13

Bringing Real-World Solutions

Newly in the Report

We are proud that more than 70 % of our installed capacity is This Report incorporates for the first time our alignment with EPH provides reliable and affordable energy supplies vital either zero or low carbon. We intend to progress our strategy the United Nations Sustainable Development Goals and the of continuous emission reduction, whilst meeting our financial 2030 Agenda. to communities all over Europe. Coming from a continent, which targets and simultaneously providing flexible capacity to is the world leader in green policies, sustainability is a natural contribute to the security of supply in our respective markets. As a result of our initiatives, we have reduced EPH's emission part of our DNA. We take the initiative in transforming the energy intensity by 12% compared to last year. In other words, for each GWh produced we saved 63 tonnes of CO -eq in 2019. system through active decarbonisation, investment in renewable 2 power generation, and strengthening the security of European energy infrastructure and supplies.

Newly installed technology in Eustream KS05, Slovakia. INTRODUCTION 14 PART 1 15

Leading Decarbonisation Eggborough power plant In 2019, we decommissioned 1.96 GW We strive to seek genuine solutions. We are not interested of hard coal-fired in Eggborough power in merely offloading obsolete power generation units. Instead, plant. As of now, we are considering its conversion into gas-fired power plant we put our effort into decommissioning carbon-intensive plants with 2,500 MW in installed capacity. and actively converting them to low-carbon or to fully renewable

ones. In the last seven years, we have cut 18 million tonnes of Kilroot power plant

CO2-eq emissions yearly. As of today, coal sources account for In 2019, we acquired a coal-fired only 11% of EPH’s consolidated financial results. power plant in Kilroot, Republic of Ireland, which we will decommission in 2024 and replace with a new, highly Lynemouth project efficient gas generation unit. All this is In 2019, the total provision for restoration In 2019, we completed and commenced in line with the coal phase out in 2025 operations at the Lynemouth project – announced by the UK government. and decommissioning was EUR 1,082 million. the conversion of a hard coal power plant into a state-of-the-art carbon-neutral biomass power generation unit with net installed capacity of more than 400 MW. Lynemouth power plant stopped burning hard coal in December 2015, which alone resulted in a 2.7 million tonnes

reduction in CO2-eq annually. Czech cogeneration heating plants

Although no government deadline for coal phase out has been announced by the Czech government, our predominantly lignite-based cogeneration fleet in the Czech Republic has commenced gradual transition towards zero or low carbon technologies. Existing lignite boilers will be refurbished to enable biomass or natural gas combustion, substantially reducing our carbon footprint.

Biomass storage silos at the Lynemouth’s power station site. The plant has 407 MW of net installed powering approximately 450,000 homes. INTRODUCTION 16 PART 1 17

Investing in Renewable Power Generation

On top of operating a vast fleet of low- Gazel Energie carbon power plants, we invest in energy We entered the French market through storage capacities, and we continue to the acquisition of a diversified power generation portfolio, including biomass, increase the 0.8 GW share of renewables wind, and solar capacity. The acquisition in our portfolio. In 2019, we added of Gazel Energie from Uniper increased our net installed capacity in renewables almost 0.3 GW of renewable sources to by 244 MW including 83.5 MW in wind, our portfolio and further invested in our 10.5 MW in photovoltaics and 150 MW in biomass. existing natural gas storage facilities, crucial for accommodating even more renewables into the grid.

Biomass power generation in Italy

By completing the acquisition of Fusine biomass power plant, we have become a leader of biomass power generation in Italy. Fusine alongside with Biomasse Italia and Biomasse Crotone make up 77% of the acquired installed capacity in Italy, which is based on modern gas-fired CCGT low carbon technology. EP New Energies We work intensively on the development of renewable power generation in the former coal mining sites in Germany. In 2019, we established EP New Energies, a subsidiary specialised in renewables Renewable electricity sources development recognising the gigawatts- EPH’s installed capacity in renewable scaled potential for wind, solar and electricity sources increased from hybrid projects that we have on our land 531 MW in 2018 to 791 MW in 2019, plots. which is an increase of 49%.

Solar power plant in Hustopeče. INTRODUCTION 18 PART 1 19

Securing Reliable and Slovak-Polish Interconnector First trials of blending natural gas with hydrogen Affordable Energy Supply We continued works on a strategic project of the Slovak-Polish SPPD, the gas distribution network Interconnector, which is on the list operator in Slovakia, prepares several of critical European infrastructural trials of blending hydrogen into The flexibility of natural gas makes it an ideal partner for renewables projects, with expected completion natural gas in its distribution network. in 2021. If successful, potential for storage while transitioning to a low-carbon future. We massively invest in better and delivery of renewable energy through hydrogen will be substantially interconnections within the European natural gas market to further enhanced. strengthen the infrastructure while increasing production efficiency by implementing state-of-the-art technologies. Moreover, we enhance the energy security of Central Europe by operating its most extensive, modern underground gas storage facilities, and we keep ourselves Eastring pipeline The feasibility study on Eastring pipeline busy looking into innovative ways of storing power. will contribute to maintaining the security CS05 compressor station of supply and support decarbonisation. As a part of our efforts to enhance energy security, we substantially increased gas transmission capacities from the Czech Republic to Slovakia after the extended CS05 compressor station was launched in January 2020.

Pipes positioned in preparation for welding as part of the Eustream PL-SK connection. INTRODUCTION 20 PART 1 21

Envisaging Future for Our Employees and Regions We Operate in

During the past more than ten years, we have been offering stable conditions for more than 11 thousand professionals. We keep their health and safety as well as their personal and career development at the forefront. We fully appreciate our mutual dependencies — as our employees rely on EPH’s future sustainable development, no innovation is possible without their top talent.

Despite the continued transformation of our portfolio towards a more flexible and climate-friendly asset base, we do our 2019 Social Highlights utmost to maintain a balanced approach to our decision making, reflecting not only the environmental, but equally •• We raise our own employees through mentoring and schol- the social and economic needs of the regions, communities, arship initiatives. We set up our tailor-made programs and our employees. to recruit young candidates, even without any specific education, and provide them with top theoretical and That is unequivocally true about EPH’s operations in fossil-fuel practical training. dense regions that are still dependent on traditional energy sources. We are proud of all the local employees, as it is •• In 2019, we dedicated and committed more than their hard work and commitment that contribute to satisfying 284,946 hours to training and development of the employ- peoples’ everyday needs. We refuse to short-sightedly close ees within EPH Group, supporting lifelong learning. these vital sites without having a clear plan for the workers and inhabitants alike. After all, we do believe in bringing real- •• We are proud employers of 288 employees with various world solutions. That is why our decomissioning projects are disabilities. We strive to provide them with the best avail- always preceded by identification of a viable alternative or able conditions to engage in daily activities. close discussions with local authorities to ensure that reliable supplies and stability of distribution grid are secured by other •• Across all eleven countries in which EPH operates, we generation sources. provide permanent contracts to 10,598 (93%) employees, various collective employment agreement schemes cover 89% of them.

•• In total, during 2019 the EPH Foundation participated in and funded 775 projects, providing overall support of EUR 1.659 million.

doplníme popisky INTERMEZZO 22 23

Why Natural Gas?

Is a Low-emission Energy Source In contrast to coal, electricity and heat generation from natural gas produces fewer greenhouse 1 gases – up to 60% less CO2 and 80% less NOx

Does not Pollute the Air Compared to other solid fuels, natural gas emits up to 99.9% less harmful particles that damage the human respiratory tract1

Complements Green Energy Sources When the wind does not blow, or it is overcast, gas- fired power plants can react quickly and cover power outages of renewable sources

Contributes to the Transformation Guarantees Energy Security Brings New Long-term of the Energy System Given the expected significant drop in European Sustainable Solutions Is Available for Everyone Natural gas reserves are predicted to meet global gas production, a robust and flexible infrastructure Renewable types of gas such as biomethane demand for the next decades, providing us with supplying Russian natural gas is critical to and synthetic methane, as well as storing energy Natural gas remains one of the most space and time for innovation and technological Europe’s sufficient supply by converting electricity from renewables affordable sources of electricity and heat development 2 into gas or hydrogen, open new possibilities for European customers for a responsible future

1 Source: Sustainability Report EPH 2018 p. 93 2 Source: Statistical Review of World Energy 2020, 69th edition, BP p.l.c., pages 32 and 36, downloaded on 31 July 2020 from: https://www.bp.com/content/dam/bp/business- sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2020-full-report.pdf FOREWORD 24 INTERMEZZO 25

Why Biomass?

Biomass is a renewable source of energy, and its combustion offers an economical alternative to fossil fuels. Biomass is widely accessible, and it can be used in cogeneration units to produce both heat and power. In comparison to other renewable sources, it is a stable source of energy since power plants can create large stocks of pellets and provide constant output to the grid.

Available Energy Carbon Neutral Except for deserts and polar areas, biomass is In the long-term biomass fuels release the same growing almost everywhere, and in some urban amount of carbon into the atmosphere as what was regions, biomass is collected as waste from gardens, absorbed by plants during their growth parks or farms. The wood processing industry also produces a large amount of biomass

Stable Renewable Source In comparison to other renewables, biomass is Cheap Fuel Source a stable source of energy since power plants can Thanks to the wide availability and form of create large stocks of pellets and provide constant occurrence, biomass technology is much cheaper output to the grid 26 27

Our business 28 PART 1 29

Natural Gas for Europe

Given the decreasing domestic production coupled with a steady increase in demand, eustream corridor plays a critical role in supplying the west, centre and south of the continent with natural gas. Since the coal and nuclear sources are gradually being phased out, meeting the basic needs of a developed society without natural gas becomes virtually impossible.

We ensure a safe and reliable flow of natural gas into Europe.

customers served

Millions

natural gas corridor length

2,332 km

gas transmitted

69 billion m3 INTRODUCTION 30 PART 1 31

Powering Communities

Essential physiological needs are non-negotiable foundations of any thriving society. We generate energy and provide households and institutions with reliable gas, electricity and heat deliveries while minimising our environmental impact through using predominantly low-carbon sources, active decarbonisation, efficient cogeneration and by significantly enlarging our renewable generation fleet every year after year.

We generate power and provide access to high-quality, affordable gas, electricity and heat.

customers served electricity produced

2.7 million 33.4 TWh

heat supplied electricity distributed

23 PJ 6.2 TWh

natural gas distributed

52 TWh FOREWORD 32 PART 1 33

Securing Supplies

In today’s climate of both social and political changes, having failsafe mechanisms in place is more important than ever before. We enhance the energy security of Central Europe by operating its most extensive, modern underground gas storage facilities. On top of that, we are on the lookout for innovative ways to store energy itself, e.g. in lithium-ion batteries, to further support the system integration of renewable sources.

We keep our supplies secure and available thanks to our storage sites.

security of supply for

Millions of customers

gas storage facilities

6 underground sites

overall storage capacity

61 TWh INTRODUCTION 34 PART 1 35

Connecting Cultivating Business Partners Our Setting

When it comes to transporting goods and material, we bet By thoughtfully transforming and developing the properties on rail transport, which is known to release the least amount that the Group owns throughout Europe, we aim at enriching of GHGs, as well as being the most fuel-efficient freight type. the region, local people and the environment. In this way, we We offer premium services and complex logistics solutions, give back function and meaning not only to places which have including professional railway employees training. so far served industrial activities but also to newly acquired localities and real estate accross Europe.

We find the untapped potential of our sites, We choose the most environment-friendly buildings and technological facilities. type of transport for our logistics needs. INTRODUCTION 36 PART 1 37

Business Financial Environmental Employees Social

37,683 GWh € 2,051 mil* 13,302 MWe 11,453 288

Indicators Total energy production EBITDA Installed capacity Total number Workers with in electricity of employees various disabilities

69 bcm € 8,583 mil* 12% 18% 284,946

Key PerformanceKey Gas transmission Sales Reduction in emission Women out of of training hours intensity (vs. 2018) total workforce

4.8 bcm 70% 3,388 GWh 18 mil 775 Gas distribution Group cash of electricity Hours worked Projects supported conversion ratio from renewables by our employees

5.7 bcm € 16.7 mld* 220 GWh 89% € 1.7 mil Gas storage capacity Consolidated assets of heat Employees covered by Total EPH Foundation from renewables collective agreements contribution

(*) This data has received limited aasurance from the independent auditing firm KPMG. About this Report

This is the fifth Sustainability Report of Energetický a průmyslový holding, a. s., through which we aim to provide a comprehensive overview of environmental, governance and social aspects of our operations in 2019. ABOUT THIS REPORT 40 PART 2 41

About this Report The Principles of our Report

Moreover, every year we are further developing this Report Our sustainability reports are following reporting guidelines This is the fifth Sustainability Report of to include more information that is relevant. While EPH is not by Global Reporting Initiative (“GRI”). This Report has been a publicly listed entity and we face no formal requirements developed to follow selected GRI Standards3: Core option. Energetický a průmyslový holding, a. s. on sustainability reporting, due to the size we have reached over the past few years and our commitment to responsible The Report has been developed with GRI’s materiality, (“EPH”, the “EPH Group” or simply the business conduct, we feel that providing relevant information stakeholder inclusiveness, sustainability context, and to our stakeholders is a natural next step in the development completeness principles in mind. Further details on our “Group”). We focused on the most of our relatively young Group. approach to materiality and stakeholder engagement undertaken during normal business activity, and also as relevant updates compared to our 2018 Our Group has grown on the back of acquisitions of various part of the preparation for this Report, is included in section entities in different countries, inheriting their own report- 4 Materiality Analysis. Sustainability Report with the aim to ing standards and internal policies. Unification of internal policies, standards and processes related to sustainability provide a balanced overview of our across the Group is a very challenging goal, requiring a substantial amount of work, which we carry out step by step. performance and activities concerning We recognize there is still a decent room for improvement in terms of quantity and quality of published data, but we do the economic, social and environmental our best to meet the expectations of our stakeholders with our fifth Report and we commit to keep raising the bar in the aspects of our operations. upcoming years.

In terms of the reporting period, the operational information (e.g. electricity produced) presented in this Report relates to our operations during the whole 2019 calendar year (same as the fiscal year), with comparative data from the previous reporting period, where available. Principles for Report Both financial and operational information (e.g. EBITDA or net power production), is reported for the acquired subsidiaries Content and Quality following the IFRS consolidated financial statements logic, e.g. for a company acquired on 30 June financial performance is presented for the period from 1 July to 31 December.

Please note that some of EPH subsidiaries also prepare their standalone sustainability reports that are publicly available GRI principles for Sustainability Reporting, including the and can be referred to as well. Principles of Report Content and Report Quality as shown in the table below were the main source of inspiration for EPH in the preparation of this Report

3 GRI Standards 2016 edition ABOUT THIS REPORT 42 PART 2 43

Report Boundaries

Principle EPH approach The Report content covers our operations in the Czech Further details on our stakeholder analysis and engagement Republic, Slovakia, and internationally. For more detailed are provided in section 4 Materiality Analysis covering Mapping of stakeholders at local and global level information on our countries of operation and legal entities stakeholders and priorities. This Report is focused on those please refer to the next sections of this Report. The Report areas that were deemed most material to our business and our Stakeholder inclusiveness Assessment of their relevance and selection of stakeholders with whom to engage boundaries we have set are based on the operational control stakeholder groups. These areas, or aspects, are explained Analysis of stakeholder concerns and expectations approach and are the same for all GRI Indicators with the in the different sections of this Report with further detailed exception of the GRI 200 Economic data and GRI 400 Social data shown in Appendix. Analysis of sustainability framework at global, European and country level data, which has been reported using financial control in order Sustainability context Study of trends in the utility and energy sector and benchmarking with peers and competitors to align the data with the financial information reported in the It is important to note that two of our large operations in EPH Annual Report. As a result, EPH has consolidated data which we do not exercise control, namely Lausitz Energie Definition of future risks and challenges at local and global level from all its entities locally and internationally where it holds Verwaltungs (“LEAG”) and Slovenské elektrárne (“SE”), are a controlling shareholding and that were deemed material for not included in consolidated 2017 - 2019 figures. However, EPH Materiality matrix definition Materiality the purposes of this Report. This list of entities covered by recognizes their importance to our stakeholders and readers Focus on material aspects and companies in the scope of our operations the Report is shown in the following section Organisational and we decided to include a section on their operations and boundaries and further described in section 3 EPH and its their sustainability initiatives in this Report. Detailed analysis of available data in relation to all companies under management control business. Completeness Inclusion of information on newly acquired companies

Table 1 Principles for report content.

Principles EPH approach Balance Assessment of strengths and weaknesses in relation to 2019 results and future goals Assurance Presentation of 2015–2019 trends for environmental and economic indicators, and 2016–2019 trends for social Comparability indicators. Comments on changes in report scope and restatements

Accuracy Establishment of internal analysis focused on quantitative measurements for all material aspects identified

Timeliness Sustainability report 2019 issued over the course of 2020

Consultations with local units interacting with stakeholders in order to define the most appropriate amount and Clarity presentation of data

Reliability Continued engagement of external assurance provider As every year, we also obtained an external assurance of certain material data included in this Report in order to

Table 2 Principles for report quality. enhance its credibility. The energy consumption, water withdrawal and discharge, and injury data of selected facilities located in the Czech Republic, Slovakia, and the UK, were assured in accordance with ISRS 4400 Engagements to perform agreed-upon procedures regarding non-financial information by an independent auditor. The assurance statement is found in the Assurance section of this Report. ABOUT THIS REPORT 44 PART 2 45

Organisational Boundaries

The list presented below includes all of the entities within the EPH portfolio deemed material for the purpose of this report. Ownership share is presented on the subholding level, not on the EPH level, where it would be further affected by the fact that EPH owns 69% of EPIF.

Ownership Financial Operational Ownership Financial Operational EPH Core Subholding Country EPH Core Subholding Country Share Control Control Share Control Control

Gas Storage Generation and Mining

NAFTA a. s. EPIF SK 69.0% Yes Yes Eggborough Power Ltd EPPE UK 100.0% Yes Yes

NAFTA Speicher GmbH & Co. KG EPIF DE 69.0% Yes Yes EP Ballylumford Limited EPPE UK 100.0% Yes Yes

POZAGAS a. s. EPIF SK 62.0% Yes Yes EP Commodities, a.s. EPPE CZ 100.0% Yes Yes

SPP Storage, s.r.o. EPIF SK 49.0% Yes Yes EP France S.A.S. EPPE FR 100.0% Yes Yes

Gas transmission EP Kilroot Limited EPPE UK 100.0% Yes Yes

eustream, a. s. EPIF SK 49.0% Yes Yes EP Langage Limited EPPE UK 100.0% Yes Yes

Gas and Power Distribution EP Produzione S.p.A. EPPE IT 100.0% Yes Yes

EP Energy Trading, a.s. EPIF CZ 100.0% Yes Yes EP SHB Limited EPPE UK 100.0% Yes Yes

SPP - distribúcia, a. s. EPIF SK 49.0% Yes Yes Helmstedter Revier GmbH EPPE DE 100.0% Yes Yes

Stredoslovenská energetika a. s. EPIF SK 49.0% Yes Yes Kraftwerk Mehrum GmbH EPPE DE 100.0% Yes Yes

Heat Infra Mitteldeutsche EPPE DE 100.0% Yes Yes Braunkohlengesellschaft mbH Budapesti Erõmû Zrt (“BERT”) EPIF HU 95.6% Yes Yes Tynagh Energy Limited EPPE IR 80.0% Yes Yes Elektrárny Opatovice, a. s. EPIF CZ 100.0% Yes Yes

Plzeňská teplárenská a. s. EPIF CZ 35.0% Yes Yes

Pražská teplárenská a. s. EPIF CZ 100.0% Yes Yes

United Energy, a. s. EPIF CZ 100.0% Yes Yes

Renewables Ownership Financial Operational Logistics Core Subholding Country Alternative Energy, s.r.o. EPIF SK 90.0% Yes Yes Share Control Control

ARISUN, s.r.o. EPIF SK 100.0% Yes Yes EP Cargo a. s. EPIF CZ 100% Yes Yes

POWERSUN a. s. EPIF CZ 100.0% Yes Yes EP Sourcing a.s. EPIF CZ 100% Yes Yes

Triskata, s.r.o. EPIF SK 100.0% Yes Yes LokoTrain s.r.o. EPLI CZ 65.0% Yes Yes

VTE Pchery, s.r.o. EPIF CZ 64.0%* Yes Yes LOCON Logistik & Consulting AG EPLI DE 100.0% Yes Yes

Biomasse Crotone SpA4 EPPE IT 51.0% Yes Yes EP Cargo Deutschland GmbH EPLI DE 100% Yes Yes

Biomasse Italia SpA4 EPPE IT 51.0% Yes Yes EP Cargo Polska S.A. EPLI PL 100% Yes Yes

Fusine Energia S.r.l.4 EPPE IT 51.0% Yes Yes SPEDICA GROUP COMPANIES, s.r.o. EPLI CZ 67.3% Yes Yes

Lynemouth Power Limited EPPE UK 100.0% Yes Yes EOP & HOKA s.r.o. EPH CZ 100% Yes Yes

Table 3 EPH Group companies. Note: Please note that EPH Core and Logistics Core include material * Share increased to 100% in January 2020. companies consolidated according to IFRS and for which consolidated 4 The remaining 49% is owned by LEAG. sustainability indicators are reported. ABOUT THIS REPORT 46 PART 2 47

Operational Boundaries

Ownership Financial Operational Joint We set the boundary as the core business operations of for the environmental indicators are restricted to the physical Share participations Subholding Country Share Control Control Control the respective companies for the environmental indicators, location of the core operations meaning that we exclude the meaning that we excluded some data for administrative and data from facilities not located in the physical location of Generation and Mining other non-core facilities (e.g. electricity for administrative main operation whose environmental impact is not deemed

Ergosud S.p.A. EPPE IT 50.0% No No Yes buildings) as we deemed these immaterial. In some instances, material compared to the impact of main operation. We however, even this data is included as the separation from the consider these issues as an area for further improvement for Lausitz Energie Kraftwerke AG EPPE DE 50.0% No No Yes underlying data was not possible. In addition, the boundaries our future reporting.

Lausitz Energie Bergbau AG EPPE DE 50.0% No No Yes

Other

Slovenské elektrárne, a. s.* EPPE SK 33.0% No No Yes

Table 3 Continues EPH Group companies * Sustainability information on share participations is reported in a separate chapter. The company Slovenské elektrárne remains, for now, legally out of the EPPE scope. Nevertheless, from the management perspective and also in this Report, these assets are included within EPPE, but its KPIs are reported separately in the section ’Share participations’ as it is related to equity consolidated group.

Notes to Compliance Between EPH’s Restatements in 2019 Report Sustainability and Financial Reporting

From the last year’s report, values for certain performance • Net power production, CO2 emissions, energy con- indicators were adjusted due to a revision in reporting. sumption and water withdrawn / discharged reported by EP Produzione for 2015 were restated to only include The information presented in this Report includes some • The 41.9% stake in the Schkopau power plant, owned • Number of final households supplied was restated retro- the period after the company acquisition. differences in the Report boundary from the data reported via the company Saale Energie GmbH, as well as the spectively for the heat infrastructure segment. The in the EPH 2019 Consolidated Annual Report. The main 38.9% stake in Przedsiębiorstwo Górnicze Silesia, which total number in 2018 was increased from 2,385,551 to • Registered injuries of contractors were not reported by changes identified are: are equity consolidated in financial reporting and over 2,720,557. two of our companies by mistake in 2018, this was correc- which EPH does not exercise control, are excluded from ted in 2019 data submission, thus the total Registered • The 50% stake in companies Lausitz Energie Kraftwerke this Report. • Net installed heat capacity of EOP and UE was restated injuries increased from 13 to 18 for 2018. AG, Lausitz Energie Bergbau AG, Ergosud S.p.A. and retrospectively to represent heat capacity of the boilers. its operating power plant Scandale and 33% stake • The majority of indicators is reported at the operating The reported heat capacity in 2018 was increased from • Logistics: In 2019, one of the Czech based companies in Slovenské elektrárne, a. s. are equity consolidated level of companies listed above. In order to properly 4,767 MW to 5,624 MW corrected reported road fatalities, by mistake there were in financial reporting. Since EPH does exercise joint capture the extent of operations, the HR data, namely reported other values, now corrected all years to zero. control over these companies, sustainability information the indicators on Headcount, Training hours, Fatalities, • Power and heat production by sources in 2018 was is not consolidated and is reported in the separate Injuries and Hours worked are reported in line with the restated for PLTEP. Biomass, which is co-combusted Following performance indicators were added: section ’Share participations’. respective subsidiaries of the above-mentioned entities. with lignite, is now reported separately within renewable These mostly operate as service companies. sources. Net power production from biomass in 2018 • Number of employees by country of operations; was increased by 68 GWh, while production from lignite was reduced by the same amount. Net heat production • Number of employees by age group; from biomass in 2018 was increased by 570 TJ, while production from lignite was reduced by the same amount. • Number of employees with a disability;

• Energy consumption: 2018: Data restated for SHB – pur- • Indirect GHG emissions (Scope 2). chased electricity was not reported in 2018, difference 30 GWh.

• Amount of training hours in 2018 was showing incomplete infomation: The correct amount of training hours in 2018 was 258 thousand. The dfference was identified in the cathegory “Other companies within the Group”. EPH and its Business

EPH Group achieved EUR 8.6 billion in sales which is by EUR 1.5 billion more than in the previous year. 50 51 51% Case Study 12 100% 18 History and Development of EPH 12 100% 19 100%

Minority stake 1 6 100% 13 100% 20 100%

400 MW stake 5 100% 100% in Schkopau 14 51% 21 2 4 7 100% power plant

80%

50% Investment increased to 73% 5 3 1 3 100% 8 95.6% 14 51% 22

62% Creation of an investment EPH established as EP Energy created within 15 team within J&T led by partnership of J&T, PPF and EPH and established Daniel Křetínský Daniel Křetínský in the as a fully vertically energy integrated undertaking 98% sector. Selected assets 1 formerly acquired by J&T contributed to EPH

31% stake in EPIF was sold to 2001 2009 2010 2011 2012 2015 2017 2019 a consortium of global institutional investors led by MIRA

2013 2016 2018

19 20 Consolidation of the 100% Company expansion to 1 9 Western European markets

6 12 13 Internal reorganisation 67.9% 5 of EPH resulting in the 16 formation of two pillars: 22 3 4 11 EP Infrastructure & EP Power Europe 35% 17 5 49% + management control, as part of SPP-I 17 1 2

5 10 15

8 5 9 100%

21 Formation of EPH

16 5 49% + management control 10 33% The core of the current EPH manage- ment team began to take shape in 2001 headed by Daniel Křetínský. Shortly after 18 its formation, the team began to focus Additional 40% purchased 50% 7 5 by EPH, overall shareholding 11 on corporate investments in the energy increased to 67.9% business and changed its approach from Fig. 1 EPH growth. being a financial investor to being a stra- tegic investor. The formal foundation of EPH took place in 2009, when its original shareholder (J&T) contributed certain # Growth through acquisitions 14 assets and cash to the Company in order for EPH to become a platform for strategic Accelerated growth via selective acquisitions investments in the energy and ancillary industries, headed by Daniel Křetínský Smaller add-on infra + growth in generation segment across Europe who at that time had a 20% stake in EPH. 5 49% share of Biomasse Italia, Biomasse Crotone and Fusine was sold to LEAG in July 2019. EPH AND ITS BUSINESS 52 PART 3 53

Geographic Presence of EPH and Key Assets EPH is a leading Central Europe based energy company operating mainly in the Czech Republic, Slovakia, Germany, France, Italy, United Slovakia Total Revenues Kingdom, Republic of Ireland, and Hungary with its headquarters € 1.86 bn in , Czech Republic. EPH Companies: eustream SPP - distribúcia Stredoslovenská Energetika Nafta

EPH is a vertically integrated energy company covering the groups based in the Czech Republic in terms of EBITDA. complete value chain in the energy sector, including more than Within Europe, in 2019, EPH Group was the seventh largest Total Revenues IR 50 companies operating in electricity and heat production net power producer in Europe. bn DE from conventional and renewable sources, electricity and € 1.55 UK heat distribution, electricity and gas trade and their supply Following an internal reorganisation initiated at the end EPH Companies: to final customers, coal extraction, and logistics. Last but not of 2015, EPH is centered around two main sub-holdings, Lynemouth Power least, EPH is an important regional player in various segments EP Infrastructure (“EPIF” or “EPIF Group”) and EP Power Eggborough Power CZ EP SHB of the gas industry, including gas transmission, gas distribu- Europe (“EPPE” or “EPPE Group”). EP Langage tion and gas storage. EPH is one of the 5 largest industrial FR EP Ballylumford SK EP Killroot HU

Czech Republic Total Revenues € 1.17 bn EPH Companies: Pražská teplárenská Elektrárny Opatovice United Energy Plzeňská energetika IT SPP Storage

Italy Total Revenues € 1.15 bn Our Achievements EPH Companies: EP Produzione EPH has a number of outstanding achievements including Fusine Energia being the market leader in the following areas: Biomasse Crotone Biomasse Italia

Germany Total Revenues OTHER 12% Hungary CZ 14% € 0.90 bn Total Revenues EPH Companies: MIBRAG 8% Saale Energie € 0.25 bn FR Kraftwerk Mehrum EPH Companies: Helmstedter Revier BERT HU 3% IE 0% SK 22% France Republic of Ireland Other revenues bn Gas distributor Largest gas Czech Gas storage player Total Revenues Total Revenues Total Revenues € 8.58 TOTAL REVENUES in Slovakia transmission district heating in region of Slovakia, € 0.68 bn € 0.02 bn € 1.00 bn route in Europe infrastructure the Czech Republic UK 18% and Austria EPH Companies: EPH Companies: Gazel Energie Tynagh Energy

Fig. 2 Key operating entities of EPH. IT 13% Note: Fully consolidated core companies are listed here as at 2018. GE 10% SE and LEAG are not included as they are equity consolidated only. EPH AND ITS BUSINESS 54 PART 3 55

Financial Performance of EPH in 2019

EBITDA of EPH Group reached EUR 2,051 million* in 2019 EBITDA of EPPE Group7 reached EUR 441 million in 2019 For the year ended December 2019, (EUR 1,743 million in 2018). The presented EBITDA is defined The 2019 results proved that EPH is a very (EUR 340 million in 2018). Generation and Mining segment as profit from operations plus depreciation and amortisation increased by EUR 19 million, or 6%, due to resumption EPH recorded total consolidated sales and is further netted for eventual impact of negative goodwill. stable and resilient group with both financial of capacity market in the UK improving performance of South Apart from this, the EBITDA calculation does not include any Humber Bank and EP Langage. Further, EBITDA was positively and EBITDA of EUR 8,583 million* and further adjustments. and non-financial indicators showing impacted by the effect of acquisitions, which was partially offset by lower performance of JTSD Group. Renewable EUR 2,051 million*, respectively. EBITDA of the EPIF Group6 amounted EUR 1,618 million in continuous improvement and sustainable Energy segment increased by EUR 82 million, or 222%, 2019 (EUR 1,418 million in 2018). The 14% increase in EBITDA primarily since Lynemouth biomass power plant was fully is largely attributable to increased volumes of transited gas growth. This is the result of not only organic operational for the whole year. which was partly driven by front-loading of volumes from 2020 to prepare for a potential Russian-Ukrainian crisis which growth but also acquisitions. 6 EBITDA of the EPIF Group does not include EBITDA of holding entities. has however not materialized as a new gas transit agreement This presentation is in line with EBITDA breakdown presented in the EPH 2019 annual report. (*) This data has received limited aasurance from the independent auditing firm KPMG. was closed between respective parties in December 2019. 7 EBITDA of the EPPE Group does not include EBITDA of holding entities. This presentation is in line with EBITDA breakdown presented in the EPH 2019 annual report.

Bussinec meeting in EP Commodities company. EPH AND ITS BUSINESS 56 PART 3 57

EPH Company Structure Key Infrastructure and Generation Companies

49%8

Gas Transmission

49%8 49%8 100%

Gas & Power Distribution 69%

95.6% 100% 100% 100% 35% Heat Infrastructure

69% 69% 69% 49%8

Gas Storage

100% 100% 100%

Germany

100% 51%9 51%9 51%9

Italy

100% 100% 100% 100% 100% 100%

United Kingdom

100% 100%

Czech Republic

100%

France

80%

Republic of Ireland

50% 33% 50% Equity consolidated participations

8 49% including management control. Fig. 3 EPH Company structure. 9 49% share of Biomasse Italia, Biomasse Crotone and Fusine was sold to LEAG n July 2019. EPH AND ITS BUSINESS 58 PART 3 59

EP Infrastructure (EPIF)10

Segment EBITDA (2019) Companies Business profile Asset highlight

Gas Transmission € 735 million Regulated / Contracted № 1 Largest gas transmission route in Europe

Gas & Power € 528 million Predominantly regulated № 1 Gas distributor in Slovakia Distribution № 2 Electricity distributor in Slovakia

Heat Infrastructure € 176 million Predominantly regulated № 1 Czech district heating infrastructure

Gas Storage € 175 million Predominantly contracted № 1 Gas storage capacity in the region of Slovakia, Czech Republic & Austria

10 EBITDA of individual segments is presented in line with EBITDA breakdown in the EPH 2019 Fig. 4 EPIF Business segments overview. annual report. Source: Company information, internal research and analysis, Gas Storage Europe. EPH AND ITS BUSINESS 60 PART 3 61

EPIF is a leading European energy infrastructure utility focused on gas transmission, gas and power distribution, heat generation and distribution and gas storage. With principal operations in the Slovak Republic and the Czech Republic, EP Infrastructure is a unique European entity with large and diverse infrastructure asset base. Measured by EBITDA, the EPIF Group believes to be among the five largest industrial groups based in the Czech Republic.

EP Infrastructure is built on four pillars, covering Gas The EPIF Group activities are regulated by several envi- Transmission, Gas and Power Distribution, Gas Storage and ronmental and energy rules by national legislations. These Heat Infrastructure. The EPIF Group operations are located in include regulations governing the discharge of pollutants, the Czech Republic, the Slovak Republic, Hungary and recently handling of hazardous substances and their disposal, cleaning also in Germany (German assets acquired in December 2018 of contaminated sites and health and safety of employees. and fully consolidated from 2019). There were no significant acquisitions or step-acquisitions in 2019. In 2019, the EPIF Group continued to be very active in the area of environmental protection, which is further described Approximately 89% of EPIF’s EBITDA is derived from gas in the Environmental section of the Report11. The companies transmission, gas and electricity distribution and gas storage within the EPIF Group are operated in a manner to ensure activities. A smaller part of EPIF’s business (approximately their failure-free operation and high efficiency in producing 11% of 2019 EPIF’s Adjusted EBITDA) is concentrated around heat and electricity (while heat is a primary product), which heat infrastructure in the Czech Republic and Hungary. has a direct impact on the volume of produced emissions.

11 For even more detailed information about EPIF’s ESG performance, please refer to the standalone EPIF’s Sustainability report 2019. 12 For full disclosure of financial results, please see Annex of this Report. In the environmental section and in the Fig. 4, we are referring to the EBITDA of segments which is EUR 1,613 million.

EPIF is committed to further improve its governance In 2019, EPIF reached consolidated sales of EUR 3,405 of the sustainability areas, including implementation of new million and Adjusted EBITDA of EUR 1,618 million12, corporate policies and disclosures in 2020, which should which represents an increase of EUR 200 million (+14%) lead to an ESG rating upgrade as well. compared to last year. EPH AND ITS BUSINESS 62 PART 3 63

Business Segment: Business Segment: Gas Transmission Gas Storage

The Group’s Gas Transmission Business is operated through The Group’s Gas Storage Business consists of NAFTA, NAFTA eustream, which is the owner and operator of one of the major Speicher, Pozagas and SPP Storage, which store natural gas European gas pipelines and is the only gas transmission under long-term contracts in underground storage (“UGS”) system operator in the Slovak Republic. The transmission facilities located in the Czech Republic, Slovakia and Germany. network of eustream is part of the Central Corridor which is one of the largest and most important piped gas import The overall storage capacity is more than 5.7 bcm13 and routes into Europe. includes assets in strategic regions connected to key gas routes. In addition to its traditional assets in Slovakia, EPIF operated storage facilities in South-Eastern Bavaria acquired at the end of 2018 with capacity of almost 1.8 bcm. In 2019, EPIF also continued to invest in operational security, storage technology modernisation, automation enhancement and utilisation of collected information to further optimise processes.

Business Segment: Gas and Power Renewable Distribution Activities of EPIF

The Group’s Gas and Power Distribution Business consists of The Group also undertakes certain other activities, primarily the following divisions: gas distribution, power distribution and generating electricity from renewable sources in addition supply. The gas distribution division comprises SPP - distribúcia, to those operated by the SSE and Plzeňská teplárenská which is responsible for the distribution of natural gas. The (“PLTEP”). In addition, EPIF owns and operates three solar power distribution division is represented by Stredoslovenská power plants and holds a minority interest in another solar distribučná that distributes electricity. The supply division power plant and a majority interest in one in the activities involve supplying power and natural gas to end Czech Republic. The Group also operates two solar power consumers which the Group conducts through EP Energy plants and a biogas facility in Slovakia. In the segment Trading in the Czech Republic and Slovakia and through the of heating, majority of production comes from Plzeňská Stredoslovenská energetika (“SSE”) in Slovakia. teplárenská due to its biomass combustion.

The annual volume of distributed natural gas in 2019 was 4.8 bcm, which is slightly above the volume distributed in 2018. In the same year, we distributed almost 6.2 TWh of electricity, which is slightly below the volume distributed in the previous year but still above the long-term average. We also kept on renovating and reconstructing our backbone network to ensure the continuity of our traditional distribution services while reflecting modern trends in electricity distribution. Total capital expenditures in this segment exceeded EUR 80 million in 2019.

13 Over 61 TWh. EPH AND ITS BUSINESS 64 PART 3 65

EP Power Europe (EPPE) On top of new zero or low carbon emission acquisitions, EPPE decommissioned 1.96 GW of net installed hard coal-fired capacity relating to Eggborough power plant. As a result, more than 70% of the fuel mix of the Group is represented by low or zero carbon emission sources.

EP Power Europe produces electricity in six European EPPE operates a balanced portfolio of primarily natural gas, countries through its balanced portfolio of low emission, biomass and coal fueled power plants. In total, EPPE consoli- renewable and traditional sources of electrical power. dates 11.8 GW of net installed power capacity in Germany, the Through strategic terminations of mining activities and UK, Ireland, France, and Italy (10.1 GW in 2018). The installed coal-related operations as well as massive investments capacities include power plant Buschhaus (352 MW) is kept in low-emission alternatives, EP Power Europe actively as cold reserve and shall be decommissioned in 2020. These assumes the responsibility for not only decarbonisa- assets generated 30.1 TWh of power (24.4 TWh in 2018). tion but also for both inhabitants and employees in the regions concerned. The EPPE Group is an environmentally and socially responsible operator of its power plants. This is a result of an expansion EP Power Europe (EPPE) is a unique energy utility, focusing of its fleet comprising renewable or low-emission sources mainly on power generation from conventional and renewable and a gradual decommissioning of coal-fired power plants sources. In addition, the company is also active in coal mining, (e.g. Eggborough, Buschhaus). and commodity trading. EPPE operates on eight European markets – Germany, Slovakia, Italy, Switzerland, the United For example, in 2018 EPPE acquired solid biomass-fired power Kingdom, the Republic of Ireland, the Czech Republic and plants Biomasse Italia and Biomasse Crotone based in Italy France. and invested in gas-fired power plants Langage and South Humber Bank in the UK. EPPE Group is divided into three reportable segments: Generation and Mining (including generation activities in Italy, This trend of decarbonisation continues well into the 2019, France, Germany, the UK and Ireland and mining activities in as EPPE continues focusing on growing share of zero or Germany), Renewables (including activities in Germany, the low carbon emission generation. Specifically, in 2019, EPPE UK, Italy and France) and Other. increased its net installed power capacity by 1.7 GW: added 2.0 GW in natural gas, 0.3 GW in renewables, reduced oil capacity by 0.1 GW and reduced hard coal capacity by 0.4 GW (1.7 GW acquired, and 2.0 GW decommissioned). In particular, we finalized acquisition of a biomass power plant Fusine that will be operated alongside with Biomasse Italia and Biomasse Crotone. EPPE also finished the final phase of the project of converting the coal-fired power plant Lynemouth into a biomass-fired power plant.

In 2019, EPPE reached consolidated sales of EUR 4,933 million and EBITDA of EUR 441 million, which represents an increase of EUR 101 million Livorno Ferraris power plant was commissioned and started operations in 2008. It is a CCGT with a net installed (+30%) compared to last year. capacity of 805 MW. EPH AND ITS BUSINESS 66 PART 3 67

Business location Net installed capacity / Fuel Production Companies Business profile Asset highlight

Contract for difference Highly efficient CCGTs with leading positions within the UK merit installed capacity United 4.0 GW 11,000 GWh Security reserve order net power production Operating thermal power plants and a biomass power plant Kingdom in gas 2.8 GW Biomass convertison of Lynemouth power plant incurred over 350 million GBP in capital expediture 0.5 GW in hard coal

0.4 GW in biomass

0.3 GW in destillate

Merchant Fleet of 5 modern gas-fired power plants in mainland Italy and installed capacity Italy 4.0 GW 15,000 GWh Must-run Sicily and 1 coal-fired power plant in Sardinia net power production Ancillary services Modern biomass plants, biomass made from wood chips in gas 3.3 GW and agro-food residuals 0.6 GW in hard coal

0.1 GW in biomass

Merchant Two combined cycle gas turbines, two coal power generation units, installed capacity France 2.3 GW 2,400 GWh Decarbonization leader in France a biomass power plant and a mix of solar and plants net power production 1.2 GW in hard coal

0.8 GW in gas

0.2 GW in biomass

0.1 GW in wind and solar

Contracted Buschhaus lignite power plant in stand by mode since 2016 installed capacity Germany 1.2 GW 1,400 GWh Security reserve MIBRAG operating a wind farm with capacity of 7 MW net power production 0.7 GW in hard coal

0.5 GW in lignite

Contract for Difference The only independent CCGT plant in the Irish market Ireland 0.4 GW installed capacity 300 GWh net power production 0.4 GW in gas

Merchant SE generated app. 70% of all energy generated in Slovakia. Equity installed capacity 12.4 GW 69,200 GWh Ancillary services LEAG operates opencast mines and three large lignite power consolidated net power production Heat co-generation plants with installed capacity of 8 GW 7.8 GW in lignite participations 1.8 GW in nuclear

1.6 GW in hydro

1.0 GW in gas

0.2 GW in hard coal

Fig. 5 EPPE Business segments overview. Source: EPH data for 2019. EPH AND ITS BUSINESS 68 PART 3 69

Business Segment: Heat Infra

The Group’s Heat Infra Business owns and operates three In 2019, the Group supplied almost 23 PJ of heat and produced large-scale heat cogeneration14 plants, generating both 3.8 TWh of gross electricity, confirming its position of a key heat and power,15 in the Czech Republic and also owns and heat supplier and provider of ancillary services both in the operates, through its 100% owned subsidiary, Pražská Czech Republic and Hungary with significant contribution teplárenská, the most extensive district heating system in the to the transmission network’s stability. The companies also Czech Republic, which supplies heat to the city of Prague. The commenced major modernisation investment projects leading Group is the largest heat supplier in terms of heat supplied to to higher production efficiency and reduced environmental final consumers in the Czech Republic. Moreover, in Hungary impact of its operations. Acquisition of a share in Plzeňská the Group owns another CHP plant, Budapesti Erömü. Total teplárenská at the end of 2018 marked a partial shift of our net installed capacity in this segment is 5,537 MWth. energy mix in 2019 towards fuels with a lower carbon footprint such as biomass and communal waste. The prices charged to our customers for heat are well below the national average for the Czech Republic, with the exception 14 Combined high efficient generation of electricity and heat. Discussed in greater detail in the Environment chapter (”Our GHG emissions impact“). of Pražská teplárenská where the prices are little bit higher 15 Also known as combined heat and power production (”CHP”). Please than the average but Prague is one of the wealthiest regions refer to the Generation assets overview section in the Environment chapter in the EU. Through this, we keep the prices affordable for all for further information. our customers.

We keep the prices affordable for all our customers. EPH AND ITS BUSINESS 70 PART 3 71

Business Segment: Generation and Mining

Generation

The Generation part of the segment is primarily represented Moreover, in Italy EPPE owns also 50% stake in Scandale In Germany, EPPE has the following activities: In the Republic of Ireland, EPPE controls Tynagh Energy that by investments in assets16 that generate electricity in power plant (Calabria) through Ergosud17, a joint venture operates 384 MW CCGT power plant (dual fuel natural gas • One of German assets is MIBRAG, which is the third condensation mode and which are located in markets with between EPH and A2A. and distillate). largest mining company, operating cogeneration plants an active capacity market (the UK, France and Italy), or where and a wind farm with net installed capacity of 98 MW such market is expected to be implemented soon. In France, EPPE through its subsidiary Gazel Energie In the Czech Republic, EPPE owns EP Commodities, which and 7 MW respectively. Generation, owns two combined cycle gas turbines with specializes in trading of commodities, such as gas, power, In Italy, through EP Produzione, EPPE controls facilities for a total capacity of 828 MW located near Saint-Avold, two coal coal or EUAs. • Additionally, EPPE owns a Kraftwerk Mehrum, which thermal power generation with an installed capacity of nearly power generation units with an installed capacity of 1,190 MW, operates a hard coal-fired power plant near Hannover 4.0 GW. EPPE operates a hard coal power plant Fiume Santo one located in Provence and the second one near Saint-Avold In Slovakia, EPPE focuses, through its share participa- with a net installed capacity of 690 MW. on the Sardinia Island and four gas power plants – Livorno and 150 MW biomass power plant in Provence. Gazel is also tion, on producing electricity from nuclear, hydro, solar and Ferraris, Ostiglia and Tavazzano Montanaso in the north active in electricity and gas retail supply for Industrial and coal resources blended with biomass under the ownership • Helmstedter Revier operated a lignite power plant of Italy, and Trapani in Sicilia. Commercial (“I&C”) and small-to-medium-sized enterprises of Slovenské elektrárne17. Buschhaus, which has been in security stand-by-mode (“SME“) customers. since 2016 for a fixed remuneration provided by the market operator. Decomissioning of this power station is planned in 2020. Mining

The most significant share participations include LEAG17, in The Mining part of the segment is represented by companies which EPPE owns half of the shares. LEAG operates lignite extracting lignite from surface mines in Germany. plants, covering nearly one tenth of the electricity consumption in Germany. LEAG is also the second largest German mining MIBRAG has its activities concentrated in the south of Saxony- company. Anhalt region, where it operates Profen open-cast mine, and in Saxony, where it operates Schleenhein open-cast mine. The Additionally, via Saale Energie, EPPE indirectly owns 42% produced lignite is supplied to power plants under long-term of the lignite power plant Schkopau (Saxony-Anhalt, Germany), supply agreements. Two biggest customers are Lippendorf while Uniper Kraftwerke owns 58%. However, EPH does not and Schkopau power plants. The company offers a wide exercise joint control and thus it is excluded from this Report. range of services from energy generation, landscaping to civil engineering, disposal and mine engineering services. In the United Kingdom, EPPE operates three gas-fired power plants, thermal power plants and one operational energy LEAG17, operates four Lusatian opencast mines Jänschwalde, storage facility in Northern Ireland. Oveview of EPPE’s UK Welzow-Süd, Nochten and Reichwalde. They produce around assets is as follows. 60 million tonnes of lignite per year to supply the power plants Jänschwalde, Schwarze Pumpe and Boxberg as well as the • EP Langage is a gas-fired power station located near refining plant Schwarze Pumpe. Briquettes, pulverized lignite Plymouth, Devon with installed capacity of 905 MW. and fluidized-bed lignite are processed from the raw material EP South Humber Bank is a gas-fired power station located here. The lignite is transported using the company’s own near Stallingborough with installed capacity of 1,365 MW. central railway network, which is 360 km long.

• EP Kilroot is a coal-fired power station located in Northern Ireland with the total capacity of 665 MW including 116 MW OCGT unit and 10 MW battery storage facility.

• EP Ballylumford is a power station located in Northern Ireland with a total capacity of 688 MW and operates a mix of flexible gas fired CCGT and distillate fired OCGT units.

• Eggborough is a phased out hard coal power plant near Selby in North Yorkshire. Currently a project of transfor- ming the available plant site into a new gas-fired power 16 Full overview of companies is available in the annex of this report. station (CCGT) with an installed capacity of 2.5 GW is 17 LEAG, Slovenské elektrárne and Egosud are equity consolidated, and considered. their KPIs are thus not incorporated in the total EPH data. Their respective KPIs are available in the following chapter ’Share participations’. EPH AND ITS BUSINESS 72 PART 3 73

Business Segment: Renewable Energy

Apart from the generation and mining segment, EPPE In the United Kingdom, EP UK Investments (“EPUKI”) In Italy, EPPE owns three modern biomas plants. Renewable energy portfolio in France comprises six wind farms continues to be very active in the segment of renewable purchased Lynemouth Power, the owner and operator of (located in northern and northwestern parts of France) with • The biomass-fired power plantStrongoli , situated in the central- energy. EPPE owns and operates a portfolio of primarily a 420 MW coal-fired power station in . a total capacity of 84 MW and two solar parks with a total -eastern part of Calabria. With a total capacity of 46 MW, it biomass fired plants, wind farms and photovoltaics. Total Lynemouth holds a Contract for Difference for full biomass capacity of 11 MW (areas of Le Lauzet and Brigadel). is among the biggest and most modern biomass-fired power installed capacity of EPPE’s renewable energy sources stands conversion and EPUKI has progressed this, including managing plants in Europe. at 751 MWe. the construction, fuel supply and financing workstreams. In Germany, MIBRAG operates a wind farm on the site of The biomass conversion has incurred capital expenditure the Schleenhain mine near Groitzsch, Saxony, with a total • The biomass-fired power plantCrotone with installed capacity exceeding GBP 350 million and it was commissioned in installed capacity of 7 MW. The company strives for further of 27 MW, owned and operated by Biomasse Crotone is situated autumn 2019. Lynemouth is the largest 100% biomass fired development of wind power in area of surface mines owned in the central-eastern part of Calabria. power station in the UK. by MIBRAG.

• Fusine Energia operates a biomass power plant in Fusine, province of Sondrio, with an installed capacity of 6 MW. EPH AND ITS BUSINESS 74 PART 3 75

EP Infrastructure Highlights EP Power Europe Highlights

EPIF operates critical energy Reliable partner EPPE owns and operates Individual strategy

infrastructure EPIF ensures safe, reliable and profitable operation of the a portfolio of safe & controllable for each market energy infrastructure for prices favourable for our custom- Active in gas transmission, gas and power distribution, power generation assets & EPPE has been able to acquire critical generation assets ers. EPIF is enhancing energy security and improving the heating infrastructure and gas storage. These assets are below their replacement values and has adopted an indi- conditions for a free market with natural gas in the EU. related operations regulated and / or long-term contracted. vidual strategy for each market. EPPE will seek attractive EPPE owns operations across well developed markets opportunities to invest in carefully selected assets primarily including Italy, the UK, Republic of Ireland, Germany and within its markets of operations. France. Through a portfolio of controllable power plants, EPPE provides security of supply given that renewables with their limited load factor are and will only be able to partially cover power demand. Large diversified asset base Partnership with a public entity Diversified across multiple types of infrastructure, which further contributes to a high contributes to EPIF’s stability. No exposure to a single Active participant in power asset type. degree of stability generation market transition Aligned goals and targets with local public partners, while Current economic situation with no new construction keeping management control. EPH, EPIF and MIRA are pri- Balanced fuel mix of necessary reliable sources with a managed diagram is vate enterprises with shareholder interests as main priority. EPPE’s power generation portfolio provides a balanced not sustainable and could lead to capacity shortages in the mix of thermal and renewables (biomass, wind, solar) future. As a result, electricity markets across the UK, Italy power plants (e.g. modern low-carbon gas fired portfolio and Germany will undergo necessary fundamental changes Track record of growth in Italy, biomass conversion project in the UK etc.). Coal (e.g. market consolidation, closure of loss-making excess and integrated mining operations only in markets that are capacities, introduction of capacity market schemes) to EPIF has historically achieved a solid track record of growth unable to physically secure a stable power supply from re-establish stable and secure electricity supplies and through value-accretive acquisitions & organic growth alternative sources (e.g. Sardinia, Germany). EPPE will play an active role in this transition. projects. Further development and optimization opportuni- ties as well as selective bolt-on M&A opportunities provide potential revenues for continued sustainable growth. Strong financing standing supported by three investment grade ratings Sustainable sizeable EBITDA (EUR 1.6 billion in 2019) Responsible with strong cash conversion (69% in 2019). Regulatory The future of coal framework motivates us to optimise (not maximise) invest- & sustainable operations Value-driven management team ments. In 2018, EPIF was awarded investment ratings by EPPE welcomes the Paris climate change agreement and with proven track record renowned rating agencies Moody’s, Fitch and S&P which fully supports its goal. It is obvious that coal became tran- EPPE is committed to operate its portfolio responsibly with were affirmed in 2019 and 2020 again. Moreover, EPIF was sitional fuel which must be gradually replaced, but on the the aim of gradually reducing its environmental footprint, Experienced and well-structured stable management also rated by an ESG rating agency Sustainalytics and has other hand, stability of the power market must be ensured meeting the interests of all stakeholders and standing ready team. Proven track record in spotting and extracting value, obtained its inaugural ESG evaluation from S&P (first ESG as well. EPPE is thus focused on acquisitions primarily into to meet its liabilities, particularly associated with the future implementation and integration. evaluation awarded in the CEE region). low and zero carbon projects. recultivation of the mining sites. EPH AND ITS BUSINESS 76 PART 3 77

EP Logistics International (EPLI) PL 100%

CZ 100%

CZ 100%

EP Logistics International has a strong representation in EP Logistics International was created the Czech Republic, and cooperates with logistics around EPH’s subsidiaries, which deal with companies in Germany owned by other EPH entities such as MIBRAG and LEAG. 65% logistics specializing in business partners’ Since its inception, EP Logistics International has achieved steady and dynamic growth. The transformation of the transport needs. The range of activities company, from the very beginning to a profitable company includes not only rail freight, freight of renowned name, employing more than 500 people and operating 60 own locomotives and more than 1,600 railway 100% forwarding, rental of railway rolling stock wagons and 60 silo tanks, took 8 years. Logistics consumed 54.4 GWh in 2019, which is an increase and intermodal operations, but also staffing of 95% compared to 2018 consumption of 27.9 GWh. This is mainly driven by the acquisition of Locon in 2019. Total freight and training of employees for railway work. PL volume transported increased even more in the same period 100% from 1,057 mil. tkm to 2,363 mil. tkm. This represents an It offers premium services and complex increase of 124%. Due to the fact that the volume of transport grew faster than energy consumption, transport efficiency logistics solutions. in tkm per consumed GWh increased by 15% between 2018 and 2019. DE 100% 100%

100% 19

DE 100%20

67%

CZ 100%

100% 100%

100%

Graph 1 Total freight volume transported during the year 18 Comprises of EOP HOKA directly under the EPH, EP CARGO under EPIF Fig. 6 Current structure of the logistics division including trading. (tonne-kilometre per year) in EPH, corresponding energy and EPLI companies (EP Cargo Deutschland, EP Cargo Polska, LOCON Logistik 19 EP Intermodal acquired in April 2019. consumption and transport efficiency.18 & Consulting, LokoTrain and SPEDICA GROUP COMPANIES). 20 LOCON Logistik & Consulting AG acquired in July 2019. EPH AND ITS BUSINESS 78 PART 3 79 Case Study Detailed Look on EPH’s 2019 Acquisition: Share Participations LOCON Logistik & Consulting AG

Slovenské elektrárne

Locon Logistik & Consulting AG is a German The company’s three founding members and Shareholder Structure railway company specialized in transporting sole shareholders sold 100% of their shares to EPH completed the first phase of the acquisition of Slovenské As of 2019, Slovenské elektrárne owned and operated a power goods, materials and containers as well as EP Logistic International in 2019. Background elektrárne, the largest power generator in the Slovak plant portfolio with 3.8 GW of net installed capacity, of which railway construction. LOCON was founded in to the transaction was the wish of EPLI to oper- Republic, on 28 July 2016. Slovenské elektrárne (“SE”) had 1.8 GW were plants, 1.6 GW were hydroelectric 2002 as a rail transport company with a focus ate freight transport and logistics in Germany two shareholders as of 31 December 2019, with the majority plants and 0.4 GW were coal power plants. These power on logistics, container transport and consulting. using its own license, which was previously only shareholder being Slovak Power Holding BV (“SPH”), owning plants together generated over 17.1 TWh, which accounted for a 66.0000000523% share in the company’s registered capital. approximately 70% of the in Slovakia To date, it is one of the most dynamic privately carried out in Germany by EP Cargo GmbH via 50% of the registered capital was owned by EP Slovakia B.V. in 2019. owned German rail transport companies. The a subcontractor. (a subsidiary of the EPH Group) and the remaining 50% was focus is on container and bulk transports in owned by Produzione S.p.A. (a subsidiary of the Enel In 2019, SE and its subsidiaries recorded EBITDA of Germany with the aim of going international in Group). The company’s minority shareholder was the Slovak EUR 342 million, compared to EUR 293 million in 2018. future and operating corridors across Europe, in LOCON specializes in B2B logistics and employs Republic, with a 33.9999999477% share in the registered particular from western and northern European 150 people, the company generated a turnover capital, represented by the Ministry of Economy of the Slovak The SE remains fully committed to sustaining its investment Republic. plan for the upcoming years 2020–2024, focusing on the ports via the connection of the EP Cargo-sister of EUR 54 million in 2019. completion of Units 3 and 4 of the Mochovce Nuclear Power companies in Poland and the Czech Republic The Enel Group is a leading multinational energy company Plant. Total investments in 2019 amounted to EUR 563 million down to East and Southeast Europe. and a prominent integrated player in the global electricity (not including capitalised interest); for the purpose of com- and gas markets. The Enel Group is present in 33 countries parison, in 2018 the figure was EUR 431 million. The vast across five continents, operating more than 89 GW of installed majority of the investments was directed at the construction capacity and having an electricity and gas transmission grid of Units 3 and 4 in Mochovce. of 2.2 million kilometres. With 73 million end customers, Enel has the largest customer base compared to other European Role of the assets in the Slovak energy market competitors and is one of the leaders in the European energy market in terms of installed capacity and EBITDA. The nuclear power plants of SE operate in a baseload mode, guaranteeing the stability of the electricity supply. They are complemented by a group of flexible run-of-river and Portfolio of Slovenské elektrárne pump storage hydroelectric power plants providing ancillary The portfolio of SE represents the critical energy infrastructure services for the grid. In 2019, SE supplied over 92.5% in Slovakia and in the CENTREL region, which also includes of electricity without GHG emissions, thus proving the the Czech Republic, Hungary and Poland. It accounts for importance of its nuclear and hydroelectric assets for the the majority of the installed capacity and generated power environmentally-friendly and sustainable future. By contrast, in Slovakia and represents 8% of installed capacity and 7% lignite technologies are perceived as crucial for the transitional of generated electricity in this region. EPPE plays a key role period in the upcoming years (the end of domestic lignite in the region given its stakes in the power generation and combustion in Slovakia is expected in 2023). supply in the Czech Republic and power generation, power and gas distribution and supply in Slovakia.

Moreover, SE continues to fully utilise and maximise its capability to operate power plants, exploring potential opportunities as well as providing innovative services to its end customers. EPH AND ITS BUSINESS 80 PART 3 81

GHG emissions in 2019 related to net electricity supply The SE portfolio represents critical fell by 18% to a historically low level due to a balanced and indispensable energy infrastructure energy mix with a high share of nuclear and hydro power in Slovakia. generation and lower supply from fossil fuel-fired thermal power plants.

Poland Sustainability initiatives

Czech Republic Air protection New projects and initiatives were launched in 2019 at Through replacing fossil fuels with wood chips – biomass conventional power plants, aimed at improving their efficiency in fluidised-bed boilers at the Vojany power plant in the Ukraine and environmental sustainability. CO2-eq emissions intensity volume of 20,956 tonnes, a greenhouse gas saving reached

from Slovenské elektrárne operations in 2019 decreased to 24,546 tonnes of CO2-eq. The equivalent savings of around

103 tonnes of CO2-eq per 1 GWh from 128 tonnes of CO2-eq 2,200 tonnes of CO2-eq, compared to the same quantity of per 1 GWh in 2018. electricity produced in coal-fired power plants, were achieved by making full use of the installed capacity of the photovoltaic Operations in thermal power plants, which are virtually the power plants at Mochovce and Vojany. only assets among the SE’s sources to emit pollutants, met in 2019 air protection requirements in accordance with the Environmental Management System Industrial Emissions Directive and related national legislation. In 2019, an ISM re-certification audit was carried out in SE,

The high efficiency of emission abatement equipment (deSOx, within which one of the main cornerstones of the ISM – Hungary deNO – SNCR and electrostatic precipitators) in combination environmental management system – was successfully Austria x with the deployment of alternative sources has had a positive upheld. In 2019, SE continued to observe the requirements effect on the year-on-year reduction of emissions of all basic under ISO 14001 standard according to the set mechanisms,

pollutants (particulate pollutants, SO2, NOx and CO), and which were applied also in the previous period and assessed hence on compliance with the set emission limits. positively by the auditors. The highly qualified personnel and project management were evaluated as strengths in the environmental protection system.

31 × Hydroelectric power plants 1,590 MW

2× Nuclear power plants 1,814 MW

2 × Thermal power plants 414 MW

7.5% Electricity supply MW 92.5% Carbon free electricity supply 2 × Solar power plants 1.8 with CO2 emmissions

Fig. 7 Portfolio of Slovenské Elektrárne. Fig. 8 Carbon Emissions of energy supply in 2019. EPH AND ITS BUSINESS 82 PART 3 83

Water Protection Environmental Burdens There was a slight year-on-year increase in potable water Aware of the impact of its past activities on the surrounding The Water – Water Energetic Reactor consumption, but overall, potable water consumption shows environment, Slovenské elektrárne has been constantly and a downward trend. The main reasons for the increase in responsibly approaching environmental protection. Over the potable water consumption are leaks on the pipelines, which long term, the SE has been paying attention to the issues of 3.4 GW of completely carbon-free generation, whereby both hydro and nuclear are however being regularly searched for and removed. environmental burdens, especially at sites of the Nováky and energy have an irreplaceable role in terms of the EU Member States’ commit- Flushing of potable water distribution lines at the MO34 (Units Vojany thermal power plants. ment to reduce GHG emissions by 55% from 1999 to 2030. 3 and 4 of the Mochovce Nuclear Power Plant) construction site also contributed to the increase, which was necessary to In 2019, in the framework of the issue of environmental maintain the required quality parameters for potable water. burdens, attention was given mostly to the following activities. Unique hydro power plant group with 0.6 GW of run-of river and 1 GW of In 2019, SE recorded a slight drop in the consumption ENO temporary sludge bed – at the site, the ground envi- pumped-storage units with an effectively perpetual lifetime at relatively low of technological­ and cooling water used for the production of ronment and groundwater are contaminated with arsenic. maintenance requirements and their pivotal role (pumped storage plants) in electricity and heat as a consequence of the lower production To prevent the contaminated water from flowing into the supporting the power system balance on the back of their variable power output at Vojany power plant. Over the long term, SE maintains Chalmová spa, a reaction barrier was built between the spa and operational flexibility. a steady trend in water consumption, which reflects overall and the sludge bed. On the barrier, in the reaction baskets, savings, as well as the drive for operating at the lowest the pollutants are collected and only the purified water possible input costs. continues to flow through. Back in 2016, part of the barrier was built as a pilot experiment, the results of which confirmed All 4 active nuclear units show excellent operational results and are ranked in the effectiveness of this remediation method to be up to the top 8 among all WWER1 units worldwide based on INPO index (Q3 2015) 96%. In 2019, a reaction barrier of 210 m in total was built and have an operational license with strict and comprehensive safety reviews between the spa and the settling pond, preventing the flow every 10 years performed by the regulator based on European standards. The of pollutants across the entire contact area of the settling construction project of two new nuclear units Mochovce 3 & 4 is the largest pond and the spa. In the upcoming period, the effectiveness private investment in the history of Slovakia. These units will be equipped with of remediation will be monitored. upgraded Generation III technology and based on the company’s calculations

should contribute to over 7 million tonnes CO2-eq emissions reduction once In 2019, the remediation of the environmental burden at the in operation. Zemiansky Brook site and the post-ante monitoring at the Filtration Station site were completed at the Nováky Power Plant. The approved target remediation limits were achieved for all environmental burdens. Fig. 9 The Water – Water Energetic Reactor. EPH AND ITS BUSINESS PART 2 84 85 Case Study Mochovce Nuclear Power Plant Completion

The completion of Units 3 and 4 of the Mochovce Nuclear Power Slovenské elektrárne completed hot hydrostatic testing Also in November, a team of 17 experts from the Plant is the largest private investment in Slovakia and the new units in March. The Unit 3 primary circuit with fuel mock- International Atomic Energy Agency (IAEA), includ- ups was heated and pressurised to nominal operating ing the Austrian observer, came to Mochovce for a will cover up to 26% of Slovakia’s electricity demand in the future. parameters (260°C and 12.26 MPa) with a series of Pre-OSART Mission to assess the safety of activities Commissioning of Unit 3 reached the final stage of non-active tests tests performed to prove reliability of the installation. against IAEA safety standards. The team observed and closely approached technical readiness for the initial fuel loading. The primary circuit pressure test at 19.12 MP was also the Unit 3 operator’s commitment to pre-operational successfully performed. safety and identified number of the best practice areas SE General Assembly approved a conditioned budget increase in 2019 as well as areas where further improvement could be of EUR 270 million to the total of EUR 5.7 billion. achieved. After the hot hydro-test, the integrated containment strength and tightness test of Unit 3 was successfully The man-hours worked in 2019 were at a similar level to the year carried out. The containment tightness test result At the end of 2019, Unit 3 was repeatedly re-heated to before and exceeded 10 million, reaching the total of 95.4 million from achieved was two times better than the limit set by the the nominal parameter for performing complementary the beginning of the Project (November 2008 to December 2019). An Nuclear Regulatory Authority of the Slovak Republic pressure tests of the primary circuit and reactor, and and it was the best result so far among all WWER functional tests of ventilation and safety systems in average of 3,500 employees worked on the construction site under 440 units, hence confirming the high strength and accordance with the operating procedures to be used the leadership of a 600-member team of Slovenské elektrárne and tightness of the containment. after nuclear fuel loading. its subsidiary SE SIS. Approximately 450 suppliers and contractors participated in the construction. More than 50% of contracts were The hydrostatic testing was immediately followed by an Works on Unit 4 continued with assembly and testing concluded with Slovak companies or branches. extended inspection, which was completed in August of equipment and systems, including installation and (except for activities strictly necessary before the fuel testing of all electrical panels of the instrumentation loading). This was the last phase of the non-active and control system, installation of fire detection and The output of the units after their trial run will be 2 × 471 MW, each testing before the active commissioning testing of Unit signalling systems of seismic category 1 needed for unit being designed to reach 530 MW of electrical output in the future. 3. The extended inspection included a control check energisation, and distribution of essential service The technology used is WWER 440/V-213 with pressurised water of the reactor and other primary circuit components water. Installation also included roughly 250 tonnes of reactors, i.e. the reactor is moderated and cooled by water. The MO34 such as internal reactor parts, pumps, pipelines and steel structures for seismic reinforcement structures pressuriser by visual, tightness, pressure, ultrasonic in the conventional island. technology is noted for its evolutionary design with proven technology and other tests to check the integrity and quality of the and numerous safety enhancements; inherent safety with low power primary circuit components to detect any impurities density and large primary circuit thermal capacity; as well as higher or foreign material. availability and efficiency. In August, the Nuclear Regulatory Authority of the Slovak Republic resumed administrative proceedings for the early use of Units 3 and 4 under the Building Act. Subsequently, the competent authorities and stakeholders carried out all local inspections, which were successfully concluded in November by a public hearing and inspection, including the presence of the Austrian anti-nuclear organisation Global 2000.

By the end of 2019, the physical progress of construction work on on Unit 3 and unit 4 had reached 99.3% and 87.1%, respectively. EPH AND ITS BUSINESS 86 PART 3 87

Main figures 2019 and 2018 GRI / EUSS KPI Unit 2019 2018 2019 - 2018 % Environment

million tonnes 302-1 Direct GHG emissions (Scope 1) 1.83 2.23 (0.41) (18%) CO2-eq

Emissions intensity – including heat tonnes 305-4 103 128 (26) (20%) component CO2-eq / GWh

302-1 Energy consumption TWh 52.22 52.50 (1) 0%

Hard coal TWh 1.01 2.19 (4.27) (54%)

Lignite TWh 3.97 4.26 (1.07) (7%)

Nuclear TWh 46.94 45.83 4 3%

Other TWh 0.12 0.10 0.08 21%

305-7 Total SO2 emissions thousand tonnes 1.39 3.14 (1.76) (56%)

305-7 Total NOx emissions thousand tonnes 1.21 1.32 (0.11) (8%)

305-7 Total dust emissions thousand tonnes 0.03 0.05 (0.02) (32%)

303-1 Quantity of water withdrawn million m3 53.22 55.12 (1.90) (3%)

306-1 Quantity of water discharged million m3 14.49 16.42 (1.93) (12%)

306-2 Byproducts – total production million tonnes 0.73 0.86 (0.13) (15%)

Ash million tonnes 0.25 0.30 (0.04) (14%)

Slag million tonnes 0.03 0.05 (0.02) (39%)

Gypsum million tonnes 0.11 0.13 (0.02) (13%)

Additional material million tonnes 0.15 0.19 (0.03) (17%)

Other million tonnes 0.18 0.19 (0.01) (8%)

Waste other than byproducts – total 306-2 thousand tonnes 65.07 11.59 53.47 461% production

Non-hazardous waste thousand tonnes 64.61 11.08 53.53 483%

Hazardous waste thousand tonnes 0.46 0.51 (0.06) (11%)

GRI / EUSS KPI Unit 2019 2018 2019 - 2018 %

Operations and sales21 Social

EU1 Net installed capacity – Electricity MW 3,820 3,820 0.00 0% G4-LA6 Injury Frequency Rate – Employees index 0.55 0.13 0.42 309%

Hard coal MW 198 198 0.00 0% G4-LA6 Registered injuries – Employees # 4.00 1.00 3.00 300%

Lignite MW 216 216 0.00 0% G4-9 Headcount # 4,222 4,356 (133) (3%)

Nuclear MW 1,814 1,814 0.00 0% Male # 3,510 3,624 (114) (3%)

Hydro MW 1,590 1,590 0.00 0% Female # 712 732 (19) (3%)

Photovoltaic MW 2.00 2.00 0.00 0% Executives # 21.48 21.51 (0.03) 0%

22 EU1 Net installed capacity – Heat MW 7,290 7,290 0 0% G4-LA1 New hires rate % 7 7 0.00 (4%)

EU2 Net power production TWh 1 7.1 16.8 0.32 1.90% Employee turnover rate % 9 9 0.00 (5%)

EU2 Net heat production TWh 0.65 0.63 0.02 3.52% hours per G4-LA9 Total training hours – per employee 59.09 76.56 (17.48) (23%) capita 102-7 Amount of electric energy sold TWh 21.00 23.00 (2.00) (8.70%)

Heat supplied to district heating network PJ 2.48 2.54 (0.06) (2.39%)

102-7 UCF coefficient (Unit capability factor) % 92.1 90.3 1.8 - 21 For more information, please visit www.seas.sk. 22 Restatement: There was missing installed capacity in nuclear fuel, corrected 2019 as well Table 4 Main figures 2018 and 2017. as previous years. EPH AND ITS BUSINESS 88 PART 3 89

Lausitz Energie Verwaltungsgesellschaft (LEAG)

On 30 September 2016, a Consortium of EPPE and PPF of jobs are created indirectly. Due to the connections to the Investments (the “Consortium”) completed the acquisition wholesale, consumer and capital goods industry as well as Role of the assets in the German Given the dynamic growth of German mining and generation assets in Saxony and other purchasing power effects, the Commission assumes that energy market Brandenburg from . Following the acquisition, EPPE for every direct job in the lignite industry, there is one more of renewable energies, and now owns a 50% stake in the holding entity Lausitz Energie indirect or induced job directly in the district and one more The electricity supply in Germany is based on a mix of con- Verwaltungs GmbH, which is the majority owner of the two outside the narrower geographical boundaries23. The lignite ventional and renewable energy sources. Conventional their legally granted priority key operating subsidiaries – Lausitz Energie Bergbau AG industry is a reliable business partner for many suppliers and energy sources are lignite, hard coal, natural gas, oil and (former Vattenfall Europe Mining AG) and Lausitz Energie subcontractors. nuclear power. Today, these cover approximately two thirds dispatch, the balancing tasks Kraftwerke AG (former Vattenfall Europe Generation AG), of Germany’s electricity consumption. The renewable energies all together rebranded to LEAG. Taking into account the development of the political and are primarily wind power, photovoltaic, biomass and hydro of conventional power plants economic boundary conditions, LEAG decided to revise power. While renewables and lignite are domestic energy LEAG power plants provide a stable and reliable supply its long-term mining and power plant operation concept resources in Germany, the remaining fossil energy resources are increasingly complex. of electricity and heat in Eastern Germany, with the crucial dating back to 2007. The new concept which fully complies (hard coal, oil and gas) and uranium for nuclear power plants, task of reacting flexibly to the fluctuating feed-in of wind and with the coal phase out strategy announced by the German are mainly imported. solar power and ensuring grid stability. As such, these assets government, published in March 2017, foresees significant represent a significant part of the flexible and dependable changes especially concerning the Jänschwalde site and In the absence of sufficient electricity storage capacities, capacity in Germany. the Nochten mine. which are yet to be developed on a large and commercially feasible scale, the rule for a stable electricity system is that Both socially and economically, the lignite assets are of vital the amount of electricity produced and consumed must be importance for the mining regions. Almost 8 thousand people in continuous balance. Therefore, the system, including the work in LEAG’s opencast mines, power plants, administrative network infrastructure, requires power plants that can balance offices and service sectors. Additionally, a large number out the fluctuations during the course of a day. 23 Source: KWSB final report, p. 52. While in the past, lignite-fired power plants primarily provided stable baseload generation, today their flexibility is required more and more. Electricity generation from PV and wind cannot cover consumer demand due to the variation in wind intensity and solar radiation. Since capacities for electricity storage are still limited, the contribution from wind and PV plants for the security of supply is considerably lower compared to conventional power plants. It amounts to less than 10% of the installed capacity that can be regarded as assured capacity, whereas around 90% is achieved in coal-fired power plants. LEAG’s operations include opencast mines in Additionally, due to the substantial geographic distances Jänschwalde, Welzow-Süd, Nochten and Reichwalde between the production areas of renewables (e.g. wind from the north / eastern regions of Germany) and the industrial as well as the three large lignite power plant sites consumption regions in the south / western parts of Germany, grid extensions and congestions play a decisive role for the Jänschwalde, Schwarze Pumpe and Boxberg and one integration of the renewables. Until solutions can be found for these challenges, controllable conventional power production block in Lippendorf, together representing an installed in both directions (up-regulating as well as downregulating) is essential for stability of the grid in Germany and neighbouring capacity of 8 GW. countries and stability of the economic and social environment. EPH AND ITS BUSINESS 90 PART 3 91

In Germany, lignite is currently essential to the transition to About 2,500 hectares of agricultural land have been created renewable energies along the route to more sustainable, yet on former mining dumps so far. The post-mining landscape secure electricity supply. Both, socially and economically, of the opencast mines Welzow-Süd and Jänschwalde offers lignite assets are still of vital importance for the particularly favourable conditions for agricultural areas. Lusatia region.

Coal phase out in Germany Sustainability initiatives of LEAG Responsibility and future actions

Due to Germany’s climate protection law from December of Jänschwalde using further security stand-by mechanisms. Large scale opencast mining has a significant impact on Through other activities in Germany and elsewhere the

2019, CO2 emissions are to be decreased by 55% by 2030 The Schwarze Pumpe power plant and the two most modern the landscape. Therefore, LEAG puts special emphasis on Consortium, and particularly EPH, has proven that it is well compared to 1990. By 2050, Germany aims to be largely units at the Boxberg power plant, units Q and R, are to follow initiatives to minimise the impact and to recultivate the sites positioned to fulfill all technical, legal and financial responsi- climate neutral. The law contains annual reduction targets by the end of 2038. The Lippendorf power plant in Saxony in a high-quality way to fulfil the requirements of future users bilities related to the acquired assets. The Consortium takes for the industry, building, mobility and agricultural sectors is scheduled for closure at the end of 2035. In 2026, 2029 and the ecology of the land. The recultivation processes over all regulatory obligations related to the operations, for the period up to 2030. The energy sector is expected to and 2032 it will be checked whether units that are still in focus on the restoration of forest, agricultural land and nature including provisions for recultivation. Further models to contribute between 61 to 62% reduction to reach the overall operation after 2030 can be decommissioned three years reserves in order to maintain biodiversity. This presents guarantee the fulfilment of post-mining obligations, so-called target of 2030. For this, a politically accelerated phase-out of earlier. Compared to LEAG’s previous mining concept from a unique opportunity for large-scale forest reconstruction. “Precautionary agreements”, have been concluded by Lausitz coal power production plays a central role. Already in the sum- 2017, this leads to significant structural adjustments and Such tasks can normally be achieved only by successive Energie Bergbau AG with the responsible mining authorities mer of 2018, the Federal Government set up the “Commission serious interventions in the activities and planning procedures generations of forestry activity. To date, some 30 million trees in Saxony and Brandenburg. for Growth, Structural Transformation and Employment” of LEAG. Against this backdrop the Eastern German lignite have been planted on Lusatian mine sites since 1990. About with representatives from various economic and societal sector is once again making a large contribution to German 10% of the post-mining landscape areas are prepared for

groups to make recommendations for the phase-out with CO2 reduction targets. Between 1990 and 2018 the lignite agricultural use. LEAG transfers the land to the subsequent The Consortium and EPH fully the necessary economic and social support for the German power plant fleet of LEAG and its predecessor companies users only when the soil can be guaranteed to sustain crops

coal regions. In January 2019, the Commission presented its had already reduced CO2 emissions by 46%. LEAG will and can be used for earning a living. Until then, the company endorse the long-term targets of final report, recommending a gradual reduction and an end nevertheless support this agreement by taking responsibility and its contractors, mostly regional farmers, develop the land, of coal-fired electricity generation by 2038 at the latest. At for its employees simultaneously. supported by scientific knowledge. the “Energiewende” set by the the same time, the Commission made proposals to support sustainable structural development in the regions affected. Until these phase-out dates, German lignite will continue to Groundwater withdrawal is inevitable in the case of opencast government and are committed contribute significantly to maintaining a secure, economically mining. About 6 to 7 m3 of water have to be pumped out to Based on the Commission’s report, the Federal Government and environmentally sound energy supply. Also, for achieving obtain one tonne of lignite. By constructing sealing walls to operating their portfolio to has passed a law to end coal power production, including long-term prospects for regional development, an active min- wherever technologically and geologically possible the water a phase-out plan for all LEAG power plants and compensatory ing industry as an industrial docking point is of great impor- withdrawal and its effect on the surrounding landscape is support these targets, gradually payments. In January 2020, the supervisory boards of Lausitz tance. On this basis, LEAG is further developing its business minimized. By reusing a significant amount of this water for Energie Bergbau AG and Lausitz Energie Kraftwerke AG fields with energy technologies for a secure “Energiewende 24 ”, operating a power plant the total ecological impact is mini- reducing the climate footprint. agreed to the cornerstones of this phaseout plan, which such as battery storage systems like the BigBattery Lausitz, mised and the electricity production is secured even in dry had been finalized and confirmed by the German Federal renewable energies and the potentials of hydrogen. Also, periods. About 70% of the groundwater is fed back into the Government and the four Prime Ministers whose Federal existing business fields are enhanced and opened up for regional rivers Spree, Schwarze Elster and Neiße, mostly after We honour the decision of the German government to set up States have lignite mining interests. According to the bill, third parties such as engineering, steel construction and being treated in one of LEAG’s seven water treatment plants. a security stand-by mechanism of 2.7 GW lignite power plant the exit scenario for the Lusatian mining region for the next maintenance for rail vehicles. LEAG will remain an important capacity in 2016 and placed the first of two 500-MW-blocks 19 years is as follows: The 500 MW lignite power plant units pillar for energy supply security and proceed to become an In the post-mining landscape lakes will have a share of about of Jänschwalde power plant into this mechanism on 1 October Jänschwalde A-D and Boxberg N/P operated by LEAG are innovative and versatile energy company providing jobs and 25%. In the past years LEAG laid the foundation to develop 2018. The second one followed on 1 October 2019. Both will to be phased out between 2025 and 2029, as regards parts value to the region. the former opencast mine Cottbus-Nord into the lake Cottbuser finally be shut-down after 4 years. This alone will contribute

Ostsee. Flooding started in April 2019 and the process should another approx. 8 million tonnes per annum in CO2-eq emis- be finalized in the course of 2020. sions reduction.

24 A German term for energy transition. EPH AND ITS BUSINESS 92 PART 3 93 Case Study The Lusatia lignite mining region LEAG’s BigBattery Lausitz Storage Project

Jänschwalde opencast mine Recultivated areas

Jänschwalde Electricity drives our economy and forms the basis of our society. Future power plant Cottbuser Ostsee Lake The “Energiewende” confronts the system with major challenges: Electricity from renewable sources is low-emission, but it is not Cottbus – Nord continuously available. opencast mine Recultivated areas LEAG is embarking on new paths and has built a battery storage Poland facility with a utilization capacity of 53 MWh at the Schwarze Pumpe power plant industrial site. BigBattery Lausitz combines modern power Cottbus plant infrastructure with storage technology in a completely new order Forst / Lusatia of magnitude. In this constellation the project is the only one of its kind

Welzow – Süd in Europe, to date. The storage facility, which is based on lithium-ion opencast mine technology, will make power generation more flexible, help protect the Recultivated areas Brandenburg power grid from fluctuations and thus support the system integration of renewable resources.

Spremberg The BigBattery is being established next to the Schwarze Pumpe power plant. Within the area of 110 by 62 metres, 13 containers will house the lithium-ion batteries. There are also 13 converter containers, Weißwasser a unit transformer and medium and low voltage switchgear. In July

Schwarze Pumpe 2019, the symbolic ground-breaking ceremony for the BigBattery was power plant held. Commissioning and trial operation started in summer 2020. refining plant

Nochten The investment in the BigBattery Lausitz amounts to approximately opencast mine Saxony Recultivated areas EUR 25 million. The main contractor for the construction is the Czech energy company EGEM, which is cooperating with regional service

Boxberg providers from Lusatia. The project is funded by the Federal State of power plant Brandenburg. Reichwalde opencast mine Recultivated areas Lippendorf Lignite power plant supplied by MIBRAG

Planned lignite mining

Mining areas

Recultivated areas Railway infrastructure

Fig. 10 Lusatia lignite mining region overview. In flooding State border EPH AND ITS BUSINESS 94 PART 3 95

Main LEAG figures 2019 and 2018

GRI / EUSS KPI Unit 2019 2018 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2019 - 2018 %

Operations and sales Environment

Coal extraction million tonnes 52.00 60.70 (8.70) (14%) million tonnes 302-1 Direct GHG emissions (Scope 1) 53.32 60.35 (7.03) (12%) CO2-eq EU1 Net installed capacity – Electricity MW 7,782 7,782 0 0% Emissions intensity – including heat tonne 305-4 1,004 1,018 -14 (1%) Lignite MW 7,595 7,595 0 0% component CO2-eq / GWh

OCGT and other NG MW 184 184 0 0% 302-1 Energy consumption TWh 135.83 152.22 (16.39) (11%)

Biomass MW 3 3 0 0% Lignite TWh 132.78 149.17 (16.39) (11%)

EU1 Net installed capacity – Heat MW 1,802 1,802 0 0% Other TWh 2.96 2.87 0.09 3%

EU2 Net power production TWh 49.63 55.61 (5.97) (11%) 305-7 Total SO2 emissions thousand tonnes 31.44 38.85 (7.41) (19%)

EU2 Net heat production TWh 3.47 3.66 (0.20) (5%) 305-7 Total NOx emissions thousand tonnes 36.02 42.85 (6.83) (16%)

102-7 Amount of electric energy sold TWh 48.27 54.04 (5.77) (11%) 305-7 Total dust emissions thousand tonnes 1.14 1.36 (0.22) (16%)

102-7 Heat supplied to district heating network PJ 11.34 12.05 (0.71) (6%) 303-1 Quantity of water withdrawn million m3 473 601 (128) (21%)

306-1 Quantity of water discharged million m3 5.00 7.09 (2.09) (29%)

306-2 Byproducts – total production million tonnes 7.01 9.17 (2.15) (23%)

Social Ash million tonnes 2.96 4.32 (1.36) (32%)

Slag million tonnes 1.02 1.44 (0.41) (29%) G4-LA6 Injury Frequency Rate – Employees index 1.60 1.42 0.18 13% Gypsum million tonnes 3.03 3.41 (0.38) (11%) G4-LA6 Registered injuries – Employees # 20.00 18.00 2.00 11% Waste other than byproducts – G4-9 Headcount # 7,802 8,053 (251) (3%) 306-2 thousand tonnes 4,806 5,847 (1,042) (18%) total production

Male total # 6,306 6,501 (195) (3%) Non-hazardous waste thousand tonnes 4,801 5,841 (1,040) (18%)

Female total # 1,496 1,552 (56) (4%) Hazardous waste thousand tonnes 4.82 6.29 (1.46) (23%)

Executives # 95.00 101.00 (6.00) (6%) Land creation and regeneration hectares 333 394 (394) (100%)

G4-LA1 New hires rate % 6% 7% (1%) / Agricultural hectares 60 277 (277) (100%)

Employee turnover rate % 9% 10% (1%) / Forest hectares 190 49.00 (49.00) (100%)

G4-LA9 Total training hours – per employee hours per capita 38.21 39.99 (1.78) (4%) Other uses for nature protection hectares 83 68.00 (68.00) (100%)

Table 5 Main LEAG figures 2019 and 2018. EPH AND ITS BUSINESS 96 PART 3 97

Ergosud

EPH owns a 50% stake in the Italian company Ergosud, The Scandale plant, prepared for cogeneration, consists EP France Group Locon Group that operates power plant Scandale. The plant belongs to of two equal, independent modules with a total capacity of the most advanced and modern electricity generation power 816 MW. The production of electricity reached its 5-year On 9 July 2019, EPPE and Uniper successfully concluded On 26 July 2019, EP Logistics International took over 100% plants, thanks to the use of the innovative combined cycle maximum of 2,443 GWh which is 7.4% higher then previous the negotiations announced at the end of December 2018 share of LOCON Logistik & Consulting and its subsidiary technology for combustion of natural gas. It adopts the most 2,274 GWh in 2018. The plant’s direct GHG emissions were on the sale of Uniper’s activities in France. companies.

advanced construction technologies in order to minimize the 933,308 tonnes of CO2-eq in 2019 compared to 868,206 in environmental impact and maximize the thermal efficiency 2018 with emission intensity in electricity production reaching The scope of the transaction includes mainly Uniper’s French The LOCON Group has been operating as a private rail

(which reaches 56.67%, one of the best values achievable 382 tonnes of CO2-eq per GWh, which is in line with 5-year sales business, two gas-fired power plants in Saint-Avold carrier specializing in container rail transport in Germany with this type of system). average. The plant is currently dispatched by the second (Lorraine), two coal-fired power plants in Saint-Avold and for 17 years but is also active in rail construction contracts. owner based on the concluded tolling agreement. Gardanne Provence, the biomass power plant “Provence 4 LOCON’s fleet consists of thirty locomotives and more than The Scandale plant has set environmental protection and the Biomasse” in Gardanne and wind and solar power plants. 250 freight wagons, and it also operates a diesel locomotive health and safety of workers as its primary objective. Adopting Combined net installed capacity is 2.3 GW. The two coal-fired service center and a container train dock in Brandenburg. the most advanced technical solutions, the plant has been power plants are expected to be taken offline by 2022, in achieving one of the lowest emission limits in the sector, line with the latest announcements of French government The acquisition of a licensed railway carrier for Germany was proving the combined cycle technology to be one of the most regarding planned decarbonization. one of the strategic objectives of EPLI, and therefor LOCON efficient ways of producing electricity. In addition, the plant has become one of the key elements of further development is equipped with a “zero liquid discharge” system that allows The activities and assets at these sites and at Uniper France’s of the logistics group under the auspices of EPH. to reuse all wastewater, including part of rainwater, limiting headquarters in Colombes near Paris were fully transferred the use of water from the outside to a minimum. to EPH on completion.

Tynagh Energy Limited EP Intermodal

On 29 October 2019, EP UK Investments Limited completed On 12 April 2019, EP Logistics International acquired 100% the acquisition of 80% of the shares of Tynagh Energy Limited share of EP Intermodal a.s. New Acquisitions from EFS Tynagh Holding Company Limited and GAMA Energy International BV, entities of GE Energy Financial Services EP Intermodal is a company providing customized project and GAMA Holding, respectively. Mountside Partners Limited solutions in the field of continental combined transport that EP Kilroot Limited remains a 20% shareholder. subsequently puts into practice and ensures reliable function- ing of the entire process. Fusine Energia and EP Ballylumford Limited Tynagh Energy Limited is an independent power producer in the Republic of Ireland owning 384 MW. Combined Cycle The main objective of the company is to analyze the current On 7 February 2019, the EPH Group through EP New Energy On 13 June 2019, EP UK Investments Limited (“EPUKI”) Power Plant in east Co. Galway. This is the first acquisition by state of the European transport system and to focus on com- Italia (“EPNEI”), a subsidiary of NADURENE and EP Power acquired generation assets at Ballylumford and Kilroot, with EPH in the Republic of Ireland and complements its existing bined transport according to the partners’ requirements. The Europe, acquired Fusine Energia (“Fusine”) from Holcim a combined installed capacity of 1.4 GW, in Northern Ireland, portfolio in the United Kingdom. company offers independent and flexible service based on the Italia Group. The acquired company operates the biomass from AES Corporation (“AES”). The acquisition includes knowledge and long-term experience in the area of develop- power plant in Fusine, province of Sondrio, with an installed a combined cycle gas turbine (CCGT), a battery storage facility, All four acquisitions confirm EPH focus on low carbon (gas ment and sustainability of the intermodal transport network. capacity of 6 MW. The operation is part of the strategy of the open cycle turbines and a coal fired power station (with an power plants in the Northern Ireland and Republic of Ireland) Group to develop the renewable energy business. This is expectation to rebuild into a gas power station, feasibility tests and zero carbon (renewables in France and Italy) projects. the third investment in biomass energy done by EPH in Italy. have been progressing during 2020 and the assumed cease Related coal capacities are perceived as non-core assets In December 2017, EPNEI completed the acquisition of the of coal operation is in 2023). EPUKI will acquire AES’ entire with closure currently scheduled by local goverments during biomass power plants Strongoli and Crotone (with a total Northern Irish business including all assets, systems and key 2020s (see above). capacity of 73 MW). management and staff. This represents the first acquisition by EPH into Northern Ireland’s energy market, which forms part of the all-island Irish market. EPH AND ITS BUSINESS 98 PART 3 99

Subsequent Events

The Group has been implementing measures to mitigate the Acquisition of Humbly Grove gas impact on employees and on the Group’s operations. The risks German coal phase out Success in the capacity auction are monitored regularly and taken measures are adjusted storage The draft law presented by the German federal government in the UK accordingly, as the situation remains unclear and volatile. in January 2020 for the phase-out of lignite currently calls On 20 March 2020, EP UK Investments Limited acquired During the first quarter of 2020, in the UK, the capacity for the end of operations of the power plants Schkopau and 100% shares in Humbly Grove Energy Limited and its sub- market auction three years ahead of delivery (“T-3 auction”) Main measures implemented by management notably Lippendorf, which receive lignite from MIBRAG, in 2034 sidiary Humbly Grove Energy Service Limited in the United for the 2022/2023 delivery year and the T-4 auction for the include: respectively 2035. For the lignite strip mine Schleenhain, Kingdom from Petronas. Humbly Grove owns and operates 2023 /2024 delivery year were held. which supplies the Lippendorf power plant, this leads to underground gas storage facilities (the Humbly Grove Oil Field) • Implementation of extensive home office program, where a maximum term through the end of 2035, thereby a further near Alton, Hampshire. The business operations are to be employees that do not necessarily have to work from the Both EP Langage and EP South Humber Bank secured capac- three year reduction of operations as compared with the run in cooperation with EPUKI providing a long-term storage office are asked to work from home; ity agreements at higher than expected clearing prices, which recommendations of the “Growth, Structural change and contract, NAFTA (part of EPIF Group) acting as a technical shall enable success operation of both power plants in the Employment” commission (KWSB) dated 26 January 2019. advisor and EP Commodities. • Special regime for employees working in critical areas future. Further, on 7 May 2020, power plants Ballylumford, As a consequence of the shorter period for accumulation as of operation. Kilroot and Tynagh succeeded also in the T-4 capacity market well as changes in the terminal positions of the strip mines, auction securing the extension of their contracts for the energy the future use of these parameters will result in the need to Furthermore, EPH Group has been securing constant internal supplies into the transmission grid across the island of Ireland. record additional expenses, primarily for increase in the provi- Pandemic of coronavirus communication from the first day of the emergency, in order sion for the reclamation of the Schleenhain strip mine. The to share with its employees the health and behavioral rules Lastly, the Group gained a 10-year capacity contract for Outbreak of new human-to-human airborne virus (“COVID-19”) aforementioned law is also expected to lead to an increase established by the authorities. Kilroot enabling the decommissioning of the current coal-fired was declared a pandemic by the WHO on 11 March 2020. in expenses recognized by the equity accounted investee block and replacing it with a low-emission gas-fired unit with Government authorities of countries in which the Group LEAG for the same reasons. Based on the information currently available, despite potential installed capacity of more than 300 MW (decommissioning operates introduced various restrictions including restriction short-term results’ volatility caused by the pandemic, the expected by the end of 2023 provided all regulatory and on cross-border movement of people, on free movement of Group’s performance is not expected to be significantly other conditions are met). people and their gathering, closing of retailers except those impaired in the medium- to long term as the significant part necessary to serve basic needs (as food, pharmacy, clean- EPPE will take over the Schkopau of its operated assets remains regulated and/or long-term ing agents and similar), closing of restaurants, museums, contracted. power plant in 2021 cinemas, theatres, sport facilities, etc. Besides the restrictions Sale of Pražská teplárenská and introduced by Government authorities, economies of countries In February 2020, EPPE as owner of 42% stake in Schkopau The management cannot however preclude the possibility that will also be influenced by voluntary temporary shutdown of power plant agreed with Uniper to acquire the remaining stake Budapesti Erőmű Zrt. to Veolia any extension of the current measures, or any re-introduction some factories or voluntary limitation of business operations. and take it over in October 2021. Completion of the transaction or escalation of lockdowns, or a consequential adverse impact On 7 September 2020, EP Infrastructure announced the sale is still subject to the approval by the German Federal Cartel of such measures on the economic environment where the of its approximately 95.62% share in Budapesti Erőmű Zrt. The spread of COVID-19 has caused a serious situation Office. Schkopau is a 900 MW lignite-fired power plant in Group operates will not have an adverse effect on the Group, (BERT), 100% share in Pražská teplárenská and PT Transit across the whole society and global economy. The Group’s Saxony-Anhalt, which is an important component of Central and its financial position and operating results, in the medium to Veolia group. The transaction still needs to be approved management has been critically monitoring and evaluating Germany’s energy supply sourced primarily by lignite produced and longer term. The Group continues to monitor the situation by the competition authority and certain technical conditions the impacts with having implemented relevant measures. in the Profen open-cast mine belonging to MIBRAG. closely and will respond to mitigate the impact of such events need to be met. Main focus of the Group is guaranteeing health and safety and circumstances as they occur. of its employees, which remains the Group’s top priority, and safeguarding the continuity of the essential energy security services in the countries where the Group operates. Disposal of French CCGT assets to Total S.A.

During Q3 2020, EPPE disposed its CCGT assets in France Emile Huchet 7 & 8 in a back-to-back deal with Total S.A. Materiality Analysis

EPH is conscious of the importance of its economic, social and environmental impact. Along with proven business results, EPH strives to respond to its key stakeholders’ concerns and expectations, facing main challenges by providing the highest quality in its operations. MATERIALITY ANALYSIS 102 PART 4 103

Our Stakeholders Stakeholder group Description Means of communication Main expectations

This group is mainly represented by banks, bond holders • Investor relations • Transparent communication and financial institutions, whose capital is crucial for • Annual reports (financial and non-financial Investors the Group’s successful development. Their interest in EPH • Presentations reporting) and lenders sustainability performance is demonstrated at both the • Risk management EPH level and local level depending on their involvement • Environmental management in financing within the Group.

These stakeholders are very important for EPH as a whole, • Customer service • Efficient heat, gas and power Customers because their decisions determine the Group’s success. • Satisfaction surveys distribution • Website • Secure supply business In order to maintain effective relations and be able to provide timely This group of stakeholders is also characterised by interest • Technical briefing • Procurement requirements responses to particular needs, most stakeholder groups are managed at the demonstrated locally and globally. Economic performance • Website (environmental and social local level. However, on top of managing relations with the direct stakeholders Suppliers and social aspects can involve a single subsidiary or the • Informative training aspects) of the EPH Group, we are also actively engaged and interact with the and contractors whole Group, which is especially valid for the contractors • Fair and transparent procurement stakeholder groups of our subsidiaries. engaged in a centralised process (large tenders, practices procurement for areas such as IT, pipes, etc.)

Across the Group, stakeholders are monitored throughout the instead. Therefore, in the process of stakeholder engagement, As stakeholders active at the local level, they have relatively • Dedicated meetings • Open dialogue and collaboration year and their relevance in relation to our business strategy the Group also considered industry standards and sector moderate interest in the economic and environmental • Human resources policies is assessed to better understand the underlying drivers, trends. EPH continues to monitor the Sustainability reports performance of EPH subsidiaries, while social aspects are • Legislative compliance Labour and risks and opportunities from both the EPH Group as well of its competitors to assure the same high-level performance more important at both the local and global level. Strategies trade unions as the stakeholders’ perspective. In 2019, EPH updated the and constant improvement of its own reporting. that EPH defines for its labour relations (for example materiality analysis to discover if and how their expectations employment) involve all subsidiaries and thus the interest and concerns have changed. The analysis performed at the EPH Group level includes in this issue was expressed in relation to EPH as a whole.

relevant consultations with its companies in order to analyze The origin of these stakeholders predefines the level • Focus groups • Transparency about business Stakeholder engagement with regard to EPH’s sustainability the key topics and concerns raised by local stakeholders. of their interest in EPH’s sustainability activities. Due to • Opinion makers activities and their impacts performance is regularly done through a range of channels, as Local communities the legislation (for e.g. building permits or EIA), these consultations • Local community involvement summarised in the table below. Presented stakeholder analysis Each stakeholder group is interested in particular sets and municipalities stakeholders are often active in the process of local (active participation) is performed by the EPH Group based on its local stakeholders’ of sustainability issues. Depending on the stakeholder’s consultations and EPH actively discusses the issues with • Crisis risk management contributions, which play a significant role in mapping their presence, relevance and relation to the Group, the concern them. expectations and priorities. In these challenging times (the can be demonstrated at the local level – only for certain This stakeholder is active at both the local and global • Press releases • Information transparency analysis was conducted during the COVID-19 global pandemic), subsidiaries or even assets, or at a global level, where Media level (particularly in the Czech Republic where EPH has • Press conferences • Quick responses to inquiries EPH decided not to overburden its stakeholders with robust either only EPH as a holding entity or EPH together with its its headquarters). • Website stakeholder dialogue and to consider also additional resources subsidiaries are involved. The main stakeholders forming this group are • Brochure • Accountability and transparency environmental NGOs, therefore most attention is • Bulletins • Safety and security of facilities paid to environmental activities both at the local level • Conferences • Environmental management (in relation to specific business – especially generation • Reduction of emissions and mining) and the global level – with respect to how • Fair business practices NGOs EPH is going to face challenges regarding emission limits and other factors relating to sustainability in the upcoming years. Nevertheless, these organisations provide valuable information about general public concerns and expectations.

Depending on their size and business area, these • Conferences • Compliance and anti-competitive stakeholders are more interested in the economic • Best practice sharing behaviour Competitors performance and the environment of EPH as a whole. • Fair business practices • Best practice exchange

This is a broad group, containing various national and • Letters to institutions • Access to services (continuity transnational institutions. Due to this, the interest in • Direct meetings of supply) sustainability is demonstrated at both levels. Policy • Annual reports • Regulatory compliance Government decisions and social change strongly influence EPH’s • Transparency and independence and regulators business activities. Local entities are concerned about the performance of individual subsidiaries, while European institutions are looking at the EPH business from a transversal perspective. At EPH, we consider an open and transparent dialogue As the main internal stakeholders engaged in day-to- • Internal communication • Safe and stable work environment day business activities, employees are essential for • Training • Equal opportunity Employees the operations and growth of our business. • Work-life balance with our stakeholders to be an important part of the • Professional development activities we perform, together with our subsidiaries, • Freedom of association across different businesses and geographies. Table 6 Stakeholder dialogue. MATERIALITY ANALYSIS 104 PART 4 105

Primary Stakeholders Groups Engagement and Priority Areas with Stakeholders During 2019

Based on the analysis, summarized in the table above we have defined the aspects which are material for our stakeholders and In 2019, there were no major media cases decided to provide the information split into EPH performance at the global level (through quantitative information) and or any controversies related to EPH. into a presentation of various case studies at the local level (mainly through qualitative information). This analysis is then complemented by the full scope of data for the EPH Group and its subsidiaries, which were relevant and available, and is presented with a breakdown into various constituents.

Shareholder Group Economic aspects Environment Social Aspects

Level Global Local Global Local Global Local

Investors and Lenders

Customers Sustainable Employees Development Goals

Government and regulators

Suppliers and contractors Following a process of identification and prioritisation, we As part of our sustainability commitment work actively towards the timely completion of the most relevant Sustainable Development Goals. Competitors with the most relevant global initiatives, The 2030 Agenda for Sustainable Development Goals was this report incorporates for the first time adopted by the United Nations in 2015 after unprecedented Local communities and municipalities consultations with stakeholders all around the world. At its our alignment with the United Nations core, 17 Sustainable Development Goals (“SDGs”) represent a set of globally agreed targets contributing to shared peace Labour and trade unions Sustainable Development Goals and and prosperity. As such, they also recognise that economic growth must go hand-in-hand with mitigation of climate change the 2030 Agenda. impacts and enhanced access to good-quality education. NGOs

EPH works tirelessly to enhance our positive impact. Working across numerous fields, we are committed to Sustainable Media Development Goals and strive to contribute to their timely fulfilment.

Fig. 11 Stakeholder priorities High priority Low priority MATERIALITY ANALYSIS 106 PART 4 107

SDGs of high relevance Materiality Matrix

The finalized list of material items provided the framework Ensure access to affordable, reliable, Ensure sustainable consumption for compiling the content of this Report. The areas that were sustainable and modern energy for all and production patterns deemed to be the most material are shown in the materiality matrix below. EPH is an active agent in promoting transition towards When providing services, we think long-term. EPH works a new, more sustainable and inclusive energy model. While constantly to promote energy efficiency and provide access reducing the share of heat and electricity generation, EPH to decent jobs. It is imperative for us to ensure good technical puts significant efforts into speeding up the transition to conditions of our pipelines and other parts of distribution and renewable energies. transmission systems. We are proud employers of numerous Stakeholder expectations workers who contribute to preserving the environment by maintaining the highest level of infrastructure efficiency. Reduction of emissions 3,30 In addition, we are dedicated to raise customer awareness 3,09 | 3,21 on responsible energy consumption and energy savings.

3,10 Customer relationship management Promote sustained, inclusive and 2,90 2,80 | 2,84 sustainable economic growth, full and productive employment and decent work Take urgent action to combat climate Health & safety 2,70 for all change and its impacts 2,99 | 2,81 Operational efficiency Procurement As a major energy player, EPH contributes to economic In EPH, we take climate change seriously. Our commitment Employment and practices growth and acts as a reliable and fair employer. Creating jobs translates into gathering background data and pursuing 2,50 employee development 2,50 | 2,43 2,68 | 2,39 for individuals and providing energy for families, companies a strategic approach towards mitigating its impacts and 2,21 | 2,17 and other entities critical for a well-functioning society, EPH making sure we are gradually shifting towards less emission- 2,30 Development works to promote sustainable and inclusive development. intensive energy mix. of the communities Through providing the best quality services, we work to and social action Fair promote socio-economic progress in communities, cities 2,05 | 2,05 Risk and crisis conduct and countries. 2,10 management 2,81 | 2,18 Stakeholder 2,40 | 2,14 engagement Mitigation of 1,90 environmental impact 2,07 | 2,02 2,16 | 2,08 Promote peaceful and inclusive societies for sustainable development, provide 1,70 Build resilient infrastructure, promote access to justice for all and build inclusive and sustainable industrialisation effective, accountable and inclusive and foster innovation institutions at all levels 1,70 1,90 2,10 2,30 2,50 2,70 2,90 3,10 3,30

One of EPH’s major contribution to the society is its operation Having ethics as our core value, EPH is committed to the Fig. 12 Materiality matrix. Company’s impact of a reliable and high-quality energy infrastructure, which ethical treatment of all its stakeholders. In cooperation with seeks to ensure maximum possible safety and environmental local communities, we work to protect the environment while sensitivity. Equally important, EPH continues to be a key driver giving voice to the disadvantaged. We set up mechanisms of innovations for sustainable industrialisation among its to protect whistleblowers to make sure that if identified, competitors. Its recent efforts feed into increased digitalisation corruption will lead to serious consequences. No employees of activities and services and enhanced transparency. can be disadvantaged based on race, nationality, ethnicity, age, gender, sexual orientation, religious belief, political views or disabilities. In 2019, we performed an analysis updating our Materiality Matrix considering EPH’s impact on people, economy and the environment, along with the review of our stakeholders’ reasonable expectations and interests. MATERIALITY ANALYSIS 108 PART 4 109

Notes on the Materiality Matrix

The horizontal axis demonstrates the significance of EPH’s As the result, EPH has identified eleven priorities considered ESG Areas Material topics Relevant SDGs EPH contribution to the goals economic, environmental and social impacts. EPH conducted material both from the perspective of significance of the a deep analysis of the external and internal factors at global, Group’s impacts and the influence on stakeholders’ decisions. Generating products and services which bring real value to people’s lives contributes to stable economic Economic performance European and country level. EPH studied trends in the utility Within these eleven priorities, there are various material EPH and its business growth and creates ideal conditions for inclusive and and energy sector and benchmarked its performance with aspects under the GRI Standards that have formed the basis, decent employment. peers and competitors. both quantitatively and qualitatively, of this Report. Aligning efforts with NGOs, local communities and government institutions and finding a consensus over The vertical axis represents the influence of the topics on The following table links the Sustainable Development Goals Materiality analysis Stakeholder engagement complex issues helps to prevent conflicts and builds stakeholder assessment and decision-making. EPH mapped its (“SDGs”) to the relevant indicators and disclosures in the GRI a strong base for inclusive societies and sustainable development. stakeholders and updated the assessment of their relevance. Standards and Sector Disclosures. These linkages are based To incorporate industry and sector trends, the Group on a more detailed analysis available on the SDG Compass. Enhancing the Group’s ethics through preventive considered outcomes of its peer’s stakeholder dialogues. mechanisms, such as specialised committees and Results of this process were analysed and stakeholders’ Fair conduct whistleblower policies, helps to promote inclusiveness and increases access to justice regardless of status, concerns and expectations were translated into the vertical gender or age. axis of the new materiality matrix. Maintaining rigorous standards of ethical conduct throughout the supply chain, we work to promote Governance Procurement practices sustainable growth, reduce inequalities and enhance access to justice.

Strong mechanisms for evaluating risks and coordinating an effective response helps to enhance Risk and crisis management the resilience of business activities, communities and create a base for sustainable development.

Efficient and safe distribution and transmission help Operational efficiency to establish resilient energy infrastructures and make energies accessible to populations in need.

Increased understanding of the consequences of climate change, including its effects on health Reduction of emissions Environment and wellbeing, serves as the primary motivator for intensified efforts in reducing harmful emissions.

Efforts to reduce discharge of pollutants, careful Mitigation of environmental disposal of hazardous material, cleaning of impact contaminated sites and support of biodiversity have become a core of our business operations.

Employees represent a key asset of our Group. Through Employment and employee intensified efforts in training and development, we work development to promote lifelong learning opportunities and equitable access to productive employment.

Health and safety are often at the core of both internal and external stakeholders’ concerns. This is Health & Safety why we make sure that health, safety and wellbeing of our employees are given the highest priority.

Social Continuously improving our interaction with Customer relationship customers, we strive to ensure affordable access to management modern energies, uphold sustainable consumption patterns and promote inclusive societies.

Playing an active and positive role in supporting and developing communities of social action, we Development of communities help to enable access to justice for previously silent communities and establish partnerships for sustainable development.

Table 7 SDGs with most relevance to the EPH operation. Environment

In this section of the Report, EPH reports information relating to its environmental performance and impacts during the 2019 calendar year. The topics reported in this section have been driven by our materiality analysis, as described in the prior section. Given the importance of climate change and the level of interest amongst our stakeholders in this subject, we put a special focus on our performance and impact in terms of climate change. In addition, given the close connection between energy and climate change management, this section reports our combined approach and footprint for both these topics. The next parts of this section then focus on the other environmental topics identified as materially relevant to our organization. ENVIRONMENT 112 PART 5 113

Material Topics Operational Efficiency EPH Operations overview Our business even as primarily focused on energy business shows great variance in its environmental impacts. That provides additional challenge in its environmental management and efficiency achievements. Some of the companies in the EPH have relatively small impact on the environment, resource usage or GHG emissions as they role is only to act as an intermediary and to distribute the resources for their immediate use. However, companies that are in the business Mitigation Operational efficiency Reduction of emissions Adj. EBITDA 2019 (EUR million) of direct energy production are responsible for the biggest of environmental impact share of our GHG emissions. For this reason, we are disclosing Distribution and transmission overview GHG emissions: Our business and climate change Water the details and their environmental impact and management Gas transmission in all business segments. Pipeline safety management Other air pollutants Effluents and waste 735 Pipeline protection and risk evaluation Renewable energy Biodiversity Gas and power distribution 528 Efficient and safe distribution Generation assets context Generation and mining and transmission help to establish Environmental management system 322 resilient energy infrastructures Heat Infrastructure 176 Table 8 Material topics in the environment section. and make energies accessible Gas storage 175 to populations in need. Renewable energy EPPE 119 Approximately 69% of EPH’s EBITDA is derived from Gas Transmission, Gas and Power Distribution and Gas Storage EPH Other 29 activities, which are minor emitters of GHG emissions. These three segments together are responsible only for 3% of our total GHG emissions. The remaining part of our business which make up the remaining 31% is connected to power and heat generation from conventional sources, generation from renewables, mining and logistics. These are the primary Introduction sources of emissions and produce about 97% of EPH’s Renewable energy EPPE emissions. In fact, these emissions are almost purely driven by generation & mining activities while the impact of logistics EPH Other 6% is negligible.

Gas storage 1% 25 Stated total EBITDA includes holding entities, inter-segment elimina- tions, small renewables in EPIF and logistics segment. Thus, the sum of all As presented in the materiality matrix, our customers and 8% EBITDA from segments listed will slightly differ from consolidated EBITDA. We are committed to conducting our other stakeholders have increasingly high expectations that we For full EBITDA disclosure, please refer to the Annex of this report and must meet in order to conduct business in a fair and long-term for full financial disclosure, please refer to the EPH annual report 2019. Heat manner. EPH understands the high importance of managing (*) This data has received limited aasurance from the independent business activities in an environmentally Infrastructure environmental risks, considering that handling our resources auditing firm KPMG. safe and responsible manner, aiming responsibly and efficiently is the only way to set the basis for our long-term operations. Being aware that the energy 9% to decrease negative impacts on industry has been historically associated with high-energy intensity, extreme carbon emissions and overall inefficiency, the environment. the following information aims to provide a comprehensive overview of the environmental impact of our operations in € 2,051 mil* the most transparent way. TOTAL EBITDA 2019 Gas Transmission However, we realise that sustainability is a journey that requires continual progress and therefore, by working with our key stakeholders, we are committed to driving further development 35% across our businesses in the upcoming periods, including but Generation and mining not limited to constant enhancement of our environmental performance and reduction of our GHG footprint. 16% Gas & Power Distribution 25%

Graph 2 EBITDA comparison of our business segments.25 ENVIRONMENT PART 5 115 EPH Highlights As one of our crucial responsibilities, we strive to provide affordable, high quality and reliable electricity, gas and heat supply for our customers.

Transmission, Storage Our primary role and Distribution overview Electricity is essential for a country’s economic and social In the segments of Gas Transmission and Gas and Power Despite being an electricity producer in Europe, based development, as well as for facilitating and enriching people’s Distribution total distributed volumes were relatively stable. on EBITDA, we are primarily a gas transmission, gas and daily lives in the modern world. Consequently, providing Gas Transmission volumes increased by 16% to 69 bcm power distribution and gas storage company. In 2019, access to electricity and other basic commodities across all of natural gas. The same applies to gas distribution, where these activities represented 69% of our EBITDA and the communities where we operate is a primary goal of the 4.84 bcm in 2019 is a slight increase from 4.78 bcm in 2018. only about 3% of our GHG emissions. Group. It is our responsibility to guarantee that the national Power distribution also remained at 2018 levels, with 6.19 TWh electricity, gas and heat systems of the countries where we in 2019 compared to 6.27 TWh in 2018. operate as a distributor or transmission system operator enjoy a continuous and safe energy supply. The quality of the At the same time, we continued to increase efficiency of our supply is closely linked to the reliability and efficiency of operations and overhaul of our gas distribution networks Our continuous growth the transmission and distribution infrastructure, which must to further reduce the number of leaks in the distribution be able to handle the levels of demand requested. EPH, in network and ensure a high level of security when operating In 2019, our business delivered a very strong growth coordination with our partners, works continuously to develop our facilities. We also kept on renovating and reconstructing in important indicators in both installed capacity and the distribution and transmission networks and make them our backbone electricity distribution network to ensure electricity production. From the last year, our net power more efficient. the continuity of our traditional distribution services while production rose by nearly 5.1 TWh, which represents an reflecting modern trends in electricity distribution. 18% increase and our net installed capacity in electricity rose by 1,740 MW, which represents a 15% increase compared to last year.

Our improving efficiency

In the area of generation, we are more efficient every year. In 2019, for each GWh produced we saved 63

tonnes of CO2-eq compared to the last year and

achieved a level of 468 tonnes of CO2-eq per 1 GWh which means a decrease of 12%.

Our solid principles

We aim to decrease our negative impact and to reduce our negative imprint on the environment, conducting our business activities in an environmentally safe and responsible manner. In 2019, we greatly decreased our

air pollutants compared to 2018. Our SO2 emissions

declined by 26%, NOX emissions were reduced by 4% and dust emissions fell by 40%.

Graph 3 EPIF’s transmitted and distributed volumes in 2019. ENVIRONMENT 116 PART 5 Case Study Total capital expenditures in the Gas and Power Distribution segment Pipeline Protection exceeded EUR 80 million in 2019. and Risk Evaluation

The gas storage facilities serve as a consolidating element Direct GHG emissions connected to the Transmission, In EPIF, we take protection and safety operation of our pipelines in the gas system. They compensate for fluctuations in the Storage and Distribution segments very seriously. For this reason, we provide an overview of our transmission network and at the same time serve as an In the segments of Gas Transmission and Gas Storage effective tool to support trading on the gas market. Re-filling activities in NAFTA and eustream. total volumes of CO -eq emissions were slightly higher storage facilities is a process conducted before every winter 2 compared to the last year. This was given by the fact that season. During the low consumption season the storage activities in these segments increased, as was already facilities are used to store natural gas supplied from abroad. demonstrated. In the segment of gas storage, in addition to Conversely, it is possible to withdraw the natural gas from its traditional assets in Slovakia we acquired storage facilities the storage if there is a shortage in the network or if there is in South-Eastern Bavaria at the end of 2018 with the capacity increased market demand. In addition to the compensating of almost 20 TWh26. For this reason, total emissions in Gas function, their importance also increases during emergency Storage segment increased in 2019 by 24.8 thousand tonnes situations, when they play a key role in ensuring continuous NAFTA’s policies of CO -eq. deliveries and improving energy security. In Slovakia, the 2 The following policies are only related to Nafta has implemented a policy and a chain of processes con- storage capacity operated by NAFTA represents more than half nected to the evaluation of integrity risks of the gas pipelines. the protection of the pipes: of Slovakia’s annual natural gas consumption. The proximity Pipeline safety management The risk analysis sorts the parts of the pipelines per their of NAFTA’s storage facilities to the pipelines transmitting It is imperative for our core business of gas transmission and threat level and based on that derives frequency of periodical Russian gas to Europe also contributes to energy security distribution to maintain our pipeline network in good technical checks. Analytical process assesses over 25 data categories of the entire continent. condition. We are operating our pipelines and other parts of per each pipeline segment. These categories include, for Tensometric policy This policy governs the usage and process of analysing the the transmission or distribution systems with the highest due instance, type of isolation, soil, repairs, and types of materials pressure on steel pipes. diligence and with operational excellency. This translates used, ground resistance, local pressure or amount of ground to the continuous investment plans, thorough risk checks, on top of the pipe. Even low risk segments are checked on testing and maintenance of our networks. We are monitoring foot at least every month. High risk segments are checked and assessing risks that could possibly damage our network, every week to detect possible issues. from the perspective of technical risks or third-party risks. Internal check-in This policy governs the usage of a machine that goes internally through the pipe, so called pigging, where it can assess any possible defects inside of the pipe. Eustream’s policies

Eustream has a similar approach, where a set of policies Business segment 2015 2016 2017 2018 2019 exist that govern the protection, risk analysis and periodicity Aerial check-in Gas Transmission 185,780 298,922 319,110 295,817 397,546 of the pipeline check-ins. In general, risk analyses consist The transmission pipeline is also frequently checked by of evaluating data points regarding the age of the pipe, the a helicopter to minimise any potential risk by third parties. Gas and Power Distribution 4,336 3,039 3,738 3,133 2,419 type of isolation, aggressivity (toxicity) of the surrounding ground or the number of repairs on a particular section. Gas Storage 33,505 40,561 36,630 36,448 61,341 Additional policies and processes are in place that are related to the safety and security of other infrastructure parts.

Table 9 Transmission, distribution and storage GHG emissions (tonnes).

26 As Nafta Speicher was acquired at the end of 2018, only the year-end storage capacity was described in the previous report, while cumulative non-financial KPIs were not included. ENVIRONMENT 118 PART 5 119

Generation assets overview Production of electricity and heat Net power production

Power generation assets represent younger part of EPH We are continuously growing each year as we are adding portfolio and majority of these are bundled under EPPE new plants to our portfolio. Mainly thanks to this our net 40,000 GWh Renewable sources Group while heating plants are operated under EPIF. EPH electricity production increased by 18% from 28.3 TWh to 35,000 GWh Group operates with 13.3 GW of net installed capacity and 33.4 TWh. In the area of conventional electricity production, OCGT and other natural gas it has risen by 15% compared to the 11.6 GW in 2018 (purely we are decreasing our share of production from hard coal 30,000 GWh driven by generation & mining segment). These capacities and lignite (from 33% in 2018 to 21% in 2019) while the 25,000 GWh generated a total 37.7 TWh of energy, which is 14% higher production from natural gas is continuously increasing and CCGT (natural gas) than 32.9 TWh in 2018. currently the majority of our total production (from 59% in 20,000 GWh 2018 to 69% in 2019). Lignite 15,000 GWh Electricity production from natural gas grew fastest in 2019, Hard coal 10,000 GWh with an increase of 6.3 TWh in 2019 (total of 23 TWh in 2019), Oil followed by a rising production from biomass by 1.1 TWh 5,000 GWh increase in 2019 (total of 3.2 TWh in 2019), which remains our main source of renewable energy. On the other hand, the Municipal waste production of electricity from lignite and hard coal decreased by 23% and 26% respectively in 2019, which significantly reduced the company’s impact on the environment and lowered GHG footprint of the Group.

Net heat production

EPH’s electricity generation has been steadily growing since 2016, the energy mix is more sustainable thanks to the increasing share of natural gas and biomass. As a result, the use of lignite and hard coal is decreasing.

Graph 4 Net electricity and heat production. Commentary: Electricity and heat production from the renewables is discussed in greater detail in a special section in this report (see renewable energy). ENVIRONMENT 120 PART 5 121

Described developments in increasing electricity production from zero or low carbon emission sources signify the commitment of EPH to spearhead the decarbonisation of the energy sector in Europe.

Energy source 2015 2016 2017 2018 2019 % in 2018 % in 2019 Energy source 2015 2016 2017 2018 2019 % in 2018 % in 2019

Renewable sources Lignite 2,048.7 2,163.1 2,231.4 2,613.0 2,331.4 56.3% 54.6%

Wind 23.4 19.9 22.4 19.1 100.8 0.1% 0.3% CCGT - 1,864.2 1,871.2 1,720.4 1,677.0 37.1% 39.3%

Photovoltaic 18.9 18.2 19.0 20.2 27.2 0.1% 0.1% OCGT 121.4 142.0 154.2 79.5 40.1 1.7% 0.9%

Hydro 9.4 9.7 9.4 6.3 8.4 0.02% 0.03% Oil 9.4 6.2 3.1 2.9 2.9 0.1% 0.1%

Biomass - - - 2,141.6 3,241.0 7.6% 9.7% Municipal waste - - - 63.3 50.0 1.4% 1.2%

Biogas 17.0 10.1 10.0 10.4 10.5 0.04% 0.03% Biomass - - - 162.2 169.6 3.5% 4%

Total RES 68.6 57.9 60.8 2,197.6 3,387.9 7.8% 10.1% Total net heat production 2,179.4 4,175.5 4,259.9 4,641.3 4,271.0 100% 100%

Conventional sources

Hard coal 6,356.5 4,701.0 4,919.5 6,284.9 4,645.4 22.2% 13.9% Table 11 Net Heat production by source (GWh).

Lignite 4,481.8 4,352.8 3,008.0 3,008.8 2,313.0 10.6% 6.9%

CCGT (natural gas) 4,146.4 8,205.2 15,233.3 16,737.8 22,966.0 59.2% 68.7%

OCGT and other natural gas 99.5 130.8 231.4 18.4 50.3 0.1% 0.2%

Municipal waste and other 0.0 0.0 0.0 34.0 49.5 0.1% 0.1% (Conventionals)

Total Conventional 15,083.9 17,389.0 23,391.9 26,083.7 30,024.2 92.2% 89.9% Installed capacity

Total Electricity 15,152.6 17,446.9 23,452.7 28,281.3 33,412.1 100.0% 100.0% Installed capacity has been continuously growing since 2015, Regardless the installed capacity, production from lignite and as we were acquiring new companies. The total installed hard coal is decreasing due to current situation on the market electrical capacity has increased by 73% since 2015 from and general shift to more sustainable energy sources, such 7.7 GWe to 13.3 GWe. In 2019 the capacity increased by as natural gas and biomass. In fact, in recent years, EPPE has Table 10 Net electricity production by source (GWh). 15% in comparison to the year 2018. Majority of our installed accelerated its search for new low or zero carbon sources, capacity in electricity is composed of sources that produce be it new acquisitions or conversion projects. For instance energy from natural gas, which produce far less emissions decommissioning and transformation of Lynemouth (lignite than lignite and hard coal sources. Moreover, the electricity to biomass) or planned conversion of Eggborough (hard coal production from natural gas has increased by additional to natural gas) being a prime examples of this approach. 34% in 2019 and currently forms 61% of our total installed capacity (CCGT together with OCGT sources). Significant power generation assets are also owned by equity In the area of heat production, we recorded a year-on-year accounted investments. Companies belonging to this category decrease of 8%, which is primarily connected to the mild In addition, the installed capacity in natural gas will continue operated with 12.8 GW of net installed power capacity in 2019 winter. However, heat production from biomass increased by to increase as we expect to convert Eggborough, our large (12.8 GW in 2018) and they together generated almost 70 TWh 5% in 2019. In total, lignite remains our main fuel for heat former coal power plant, into a gas-fired power station (subject in 2019 which is a 7% decrease from 75 TWh in 2018. Major generation, but its share has slightly decreased in exchange to feasibility tests). The total installed capacity in heat has share of these capacities are represented by LEAG Group for growth in production from natural gas. increased by 55% since 2015 from 3.7 GWth to 5.7 GWth27. and Slovenské Elektrárne Group.28

28 In this section we exclude our equity holdings data from EPH con- 27 Power produced through co-combustion of lignite and biomass in solidated data and we talk about them separately in the section EPH PLTEP was additionally split into biomass and lignite (reported fully under and its business. This is why the report does not mention nuclear power lignite in previous SR). production for instance. ENVIRONMENT 122 PART 5 123

Installed capacity – Electricity Since 2019, we have new biomass, wind, natural gas and coal sources thanks to the acquisitions made by EPPE in Italy, the UK, France and Ireland. In total, our net installed capacity has increased by 1,740 MWe in 2019.

Energy source 2015 2016 2017 2018 2019 % in 2018 % in 2019

Renewable sources

Wind 12.9 12.9 13.0 12.9 96.4 0.1% 0.7%

Photovoltaic 16.1 16.1 17.4 17.4 27.9 0.2% 0.2%

Hydro 4.1 4.1 4.1 4.1 4.6 0.0% 0.0%

Biomass - 395.0 468.0 493.4 649.1 4.3% 4.9%

Biogas 3.0 3.0 3.0 3.0 13.0 0.0% 0.1%

Total RES 36.2 431.2 505.5 530.8 791.0 4.6% 5.9%

Conventional sources

Hard coal 2,668.5 2,668.5 3,358.5 3,358.5 2,939.0 29.0% 22.1%

Lignite 1,157.0 1,157.0 1,157.0 1,297.5 1,297.5* 11.2% 9.8% Installed capacity – Heat CCGT (natural gas) 3,200.0 3,478.0 5,748.0 5,748.0 7,527.2 49.7% 56.5% OCGT and other natural gas 283.9 283.9 283.9 283.9 540.7 2.5% 4.1%

Oil 321.0 321.0 321.0 319.6 183.5 2.8% 1.4%

Municipal waste and other 12.6 12.6 12.6 23.1 23.1 0.2% 0.2% (Conventional)

Total Conventional 7,643.0 7,921.0 10,881.0 11,030.6 12,511.0 95.4% 94.1%

Total Electricity 7,679.2 8,352.2 11,386.5 11,561.4 13,302.0 100.0% 100.0%

Table 12 Net installed capacity in electricity (in GWe).

Energy source 2015 2016 2017 2018 2019 % in 2018 % in 2019

Hard Coal 242.0 242.0 242.0 242.0 242.0 4.2% 4.3%

Lignite 2,395.0 2,395.0 2,395.0 3,028.4 2,923.4 52.4% 51.4%

CCGT - 1,400.9 1,400.9 1,400.9 1,400.9 24.2% 24.6%

OCGT 812.2 756.8 803.9 803.9 821.9 13.9% 14.4% Graph 5 Net installed capacity in Electricity and Heat.

Oil 234.0 234.0 234.0 234.0 234.0 4.0% 4.1%

Municipal waste - - - 38.6 38.6 0.7% 0.7%

Biomass - - - 31.7 31.7 0.5% 0.6%

Total net heat production 3,683.2 5,028.7 5,075.8 5,779.5 5,692.5 100% 100%

EPH Group is growing each year and as described in the chapter “EPH Table 13 Net installed capacity in heat (in MWth). and its business” in 2019, we have gained additional installed capacity through acquisitions of Fusine Energia (Italy – 6 MWe), EP Ballylumford * Including Buschhaus power plant (352 MW) in Germany which (United Kingdom – 683 MWe), EP Killroot (United Kingdom – 665 MWe), was transferred into security stand-by mechanism in October 2016 Gazel Energie (France – 2,262 MWe) and Tynagh Energy (Ireland – 384 MWe). until September 2020 and then was finally decommissioned. ENVIRONMENT 124 PART 5 125

Energy consumption Energy consumption in GWh

The total energy consumption in 2019 showed a 12% increase of Lynemouth Station in the United Kingdom. There were also compared to 2018. The reason behind this increase is 15% other fuels used in some of our operations but in aggregate growth in production fuelled by our new acquisitions of natural these were only minor sources and they together form less gas, biomass and minor coal sources in Italy, in the United than 1% of total consumption.29 Kingdom, Ireland and in France through EPPE holding. In addition, we reduced the consumption of hard coal and lignite The increased consumption was mainly due to an increase by 26% and 13% respectively. in the consumption of natural gas, the consumption of which reached almost 49 TWh in 2019 and represented 58% of the The main fuels used in EPH in both years were natural gas, total volume of energy consumed. Another primary source lignite and hard coal, but in the past two years there has been of energy whose consumption has increased significantly is a surge in consumption of biomass. This is a result of new biomass, with a 45 percent increase in consumption to the capacities primarily in Italy, France and from the conversion level of 10 TWh in 2019.

Change Energy consumption in GWh 2015 2016 2017 2018 2019 Other 2019 - 2018 Biomass Hard Coal 19,736.9 15,145.9 15,808.0 18,608.6 13,738.8 -26.2% 11% 1% Lignite 15,367.2 15,269.4 11,700.7 13,137.5 11,371.4 -13.4%

Natural Gas 9,608.8 19,539.4 31,471.2 35,989.7 48,763.8 35.5%

Oil 298.2 183.9 80.7 134.0 92.9 -30.7%

Diesel 76.5 95.5 68.0 577.7 140.1 -75.7% Lignite Purchased Electricity 64.4 71.9 83.9 179.5 154.0 -14.2%

Purchased Heat 2.8 7. 7 12.5 11.9 12.4 4.2% 14%

Biomass 359.5 192.9 45.1 6,644.5 9,635.9 45.0% Energy

SAF + Municipal waste 1.0 0.5 2.4 252.6 299.2 18.4% consumption Natural Gas Other - 0.6 0.7 0.8 1.1 37.5% in 2019 (%)

Total Energy consumption 45,515.3 50,507.8 59,272.3 75,536.8 84,209.6 11.5% 58% Hard coal

Table 14 Energy consumption in GWh. 16%

29 Energy consumption further included: oil (0.11%), diesel (0.25%), Graph 6 Energy consumption development in EPH and Energy consumption in 2019 (GWh). purchased electricity (0.16%), purchased heat (0.01%) and municipal waste (0.36%). ENVIRONMENT 126 PART 5 127

EPH’s production efficiency Energy efficiency

Energy conversion efficiency If the European climate protection targets or the goals as The graph of total energy efficiency shows that our energy adopted at the Paris climate conference that came into force consumption is increasing in line with increasing energy in April 2016 are to be met, it is clear that energy efficiency production. However, the growth in production was larger needs to be improved. At EPH, we are well aware of this than the increase in consumption so this means that in total and improvements to energy efficiency at our facilities is our efficiency in energy conversion of fuel to power and heat one of a key focus area for us. We strive to modernise our have increased. Total energy consumption in 2019 increased installations and make use of innovative technologies but by 12% compared to 2018, but our net energy production at the same time, we are also prepared to face reality and rose by 15% and in total, our efficiency improved by 1% from undergo decommissioning in the case of obsolete technology. 44% to 45% since 2018. Risks of non-compliance with environmental standards or simply where prolonged operations are not economically The increase in the consumption of natural gas and biomass viable are too high for the Group to bear. in combination with the reduction of the consumption of hard coal and lignite led to an increase in energy efficiency to 45%, The commitment to improving energy efficiency across our which is a significant increase compared to 2015 when the operations is not only beneficial for the environment, but it energy efficiency was at the level of 38%. also makes good sense for business. Improving efficiency allows us to decrease our combustion fuel costs, one of our main cost drivers, and reduce our GHG emissions for each Total energy consumption unit of energy. Moreover, this also helps to reduce the amount of emission allowances that our installations need to buy. between 2015 and 2019 increased by 85%, while energy

production rose by 121%. Fuel consumption (GWh)

As a result, our efficiency Total energy production (GWh) improved from 38% to 45% Average fuel consumption (GWh) Average energy production (GWh) during the same period. Graph 7 Total energy efficiency at EPH. Efficiency trend (%) ENVIRONMENT 128 PART 5 129 Case Study Activities EPH’s generation in the context of emission intensity in tonnes of CO2-eq per GWh generated shows continuous improvements. Emission intensity in the generation decreased by 41% from 2015 to 2019.

Modernisation of the steam turbine in Elektrárny Opatovice

Elektrárny Opatovice signed a contract for a steam turbine GHG emission intensity replacement with Doosan Škoda Power in July 2019. From the heat To be as efficient as possible and to use natural resources The emission intensity in the generation decreased by 41% economically, it is also highly important to analyse the carbon from 796.2 to 468.1 tonnes of CO2-eq per GWh generated supply point of view, the modernised back-pressure steam turbine is intensity of our generation assets.30 in the period from 2015 to 2019. This number excludes our crucial as it represents the main source of the total heat supply from non-generation companies. Overall electricity generation grew by more than 121% from EOP. 2015 to 2019. However, our emission intensity decreased as This shows a clear improvement and progress made by EPH,

shown on our CO2-eq emission levels per GWh generated. As even with new acquisitions and increasing production, our total a result, we have recorded only an 29% increase in direct GHG emissions are increasing only slightly and our emission The upgraded back-pressure steam turbine will have a capacity of greenhouse gas emissions from 2015 to 2019. efficiency is increasing significantly. We have achieved 65 MWe and 135 MWth, including all accessories such as control this through our constant investments in modernisation, In the electricity and heat generation, EPH’s emission intensity changes in generation portfolio (including coal and lignite systems, primary heat exchangers, equipment for low-pressure dropped by 12% from the previous level of 531 tonnes of power plants decommissioning) and conversion of highly regeneration heating of feed water, oil system, interconnecting piping, CO2-eq per 1 GWh in 2018 with 468 tonnes of CO2-eq per emitting sources into more sustainable energy sources. It is 1 GWh in 2019. Thus, compared to 2018, we have reduced important to mention that EPH also produces heat and power high pressure hydraulic system and field instrumentation. our emission intensity by 64 tonnes of CO2-eq per 1 GWh, in cogeneration mode31 (mainly EPIF), which increases its which represents a significant decrease in the context of efficiency and therefore in turn reduces the emission intensity. our production. The modernisation of the steam turbine will increase the efficiency of the combined heat and power production and it will not only increase the overall capacity but also enhance the reliability of heat supplies. Net electricity and heat production and their carbon intensity

Pražská teplárenská

During 2019, Pražská teplárenská initiated a project focused on the modernisation of a hot water source. The start of the greening begun in the middle of the year and involved replacement of existing gas burners with low-emission burners and adjustments of inflow of natural gas and combustion air.

Total net heat production (GWh) 30 Calculation of Emission intensity indicators excludes emissions from Total net electricity production (GWh) non-energy producing operations. Namely Eustream, SPP - distribúcia, Pozagas and NAFTA in Slovakia, SPP Storage in the Czech Republic and

Emissions intensity (tonnes CO2-eq/GWh) Nafta Speicher in Germany and in respective summary indicators in the

amount of 0.5 and 0.3 mil ton of CO2 in 2019 and 2018 respectively. Graph 8 Net electricity and heat production and their carbon intensity. 31 For further details, please refer to the GHG section. ENVIRONMENT 130 PART 5 131

EPH Group companies Subholding Country Certification standard

Environmental management Environmental management systems Integrated management system and EIS; ISO 14001; NAFTA EPIF SK system and environmental certifications and monitoring ISO 45001; ISO 9001 EMS requirements are set up to ensure the implementation NAFTA Speicher EPIF DE - compliance of the most rigorous procedures to protect the environment, identify risks and to ensure that the environmental perfor- Integrated management system and EIS; ISO 14001; Governments, society and our stakeholder groups have POZAGAS EPIF SK mance meets the requirements of the regulation. The EPH OHSAS 18001; ISO 9001 increasingly high expectations that we must meet in order to Group is committed to maintaining its certification standards secure our continued licenses to operate and avoid financial SPP Storage EPIF SK - equal to the international levels in the operations, where their penalties or other burdens that may be placed on us. usage is relevant. Gas transmission

The main certifications that are used across the EPH group Integrated management system and EIS; ISO 14001; companies are ISO 14001 and ISO 9001. The particular certifi- eustream EPIF SK ISO 14004 ; ISO 50001; ISO 9001; OHSAS 18001; cations and standards depend on the scope of each business ISO: 3484-2 line. As an example, the trading and supply companies such as EPET, EP Sourcing or EP Commodities have no physical Gas and Power Distribution operations, therefore it does not require any environmental certification. Our companies are also compliant in the case EP Energy Trading EPIF CZ ISO 9001** of energy management systems or energy audits. SPP - distribúcia EPIF SK -

Integrated management system and EIS; ISO 14001; Stredoslovenská energetika EPIF SK OHSAS 18001;

Heat Infra

Budapesti Erõmû EPIF HU ISO 9001; QMS

Integrated management system and EIS; ISO 14001; Elektrárny Opatovice EPIF CZ ISO 45001

Integrated management system and EIS; ISO 14001; Plzeňská teplárenská EPIF CZ ISO 9001

Integrated management system; ISO 14001; Pražská teplárenská EPIF CZ OHSAS 18001

United Energy EPIF CZ -

Renewables

Alternative Energy EPIF SK - We are proud to report that during 2019, there were ARISUN EPIF SK -* POWERSUN EPIF CZ -* no major incidents or fines at any of the businesses Triskata EPIF CZ -* of EPH that would result in significant impacts VTE Pchery EPIF CZ -* relevant to the environment.32 Compliance with all Biomasse Crotone EPPE IT ISO 9001; OHSAS 18001; ISO 14001 licensing regulations was consistently ensured Biomasse Italia EPPE IT ISO 9001; OHSAS 18001; ISO 14001 Fusine Energia. EPPE IT OHSAS 18001 across our operations. Lynemouth Power EPPE UK ISO 50001; OHSAS 18001; ISO 14001

Table 15 Selected EPH Group companies and their environmental certifications. 32 More details on fines and regulatory compliance are included in the * Complex environmental certifications are generally not standard in a standalone photovoltaic plants or wind turbines. Governance section of the Report. ** Trading only companies, with no physical impact except office space. ENVIRONMENT 132 PART 5 133

Reduction of Emissions

EPH Group companies Subholding Country Certification standard Increased understanding of the consequences of climate Position of EPH on Climate change and change, including its effects on health and wellbeing, serves decarbonization as the primary motivator for intensified efforts in reducing Generation and Mining According to the assessments by the Intergovernmental harmful emissions. Panel on Climate Change (“IPCC”), climate change risks Eggborough Power EPPE UK OHSAS 18001 cause significant modification and physical risk to to the living conditions of people and the environment of the world EP Ballylumford EPPE UK OHSAS 18001 Greenhouse gas emissions: and result in significant additional macroeconomic costs. EP Commodities EPPE CZ -** The resolutions passed by the Paris Climate Conference Our business and climate change (“COP 21”) in December 2015 have jointly committed all the EP France EPPE FR OHSAS 18001; ISO 50001 countries involved to limiting the global temperature increase EPH operates primarily in industries that are essential to the to significantly less than 2 degrees Celsius compared with EP Kilroot EPPE UK OHSAS 18001 development and functioning of our society. However, these the pre-industrial level. EP SHB EPPE UK ISO 14001 industries are historically associated with high energy intensity. Reflecting on the current energy sector, we fully understand EPH welcomes the climate change agreement and fully sup- EP Langage EPPE UK OHSAS 18001; ISO 14001 that we will only be able to operate our installations in the ports its goal, as a broad international consensus is the only future if we handle these resources carefully and efficiently EP Produzione EPPE IT OHSAS 18001; ISO 14001; EMAS33 way of bringing about genuine structural change at a global now, we take special consideration on the matters of GHG level that can create a more sustainable economic model. emissions and other environmental impacts very seriously Helmstedter Revier EPPE DE - We believe that the transition process needs to happen within our organization. Kraftwerk Mehrum EPPE DE - gradually to minimise unnecessary risks that would hinder economic development or cause other problems that could Even as the main part of EPH’s portfolio resides in the low Mitteldeutsche Braunkohlengesellschaft EPPE DE ISO 50001; OHSAS 18001 have unpredictable impacts on society as a whole (e.g. a longer emission intensive segments of gas transmission, electricity period of black-outs etc.). Tynagh Energy EPPE IR ISO 14001 and gas distribution and gas storage (EPIF), our other business segments of heat infra and generation and mining segments In reality we also believe that this will be the case considering do emit comparatively more greenhouse gasses and other air Logistics that: emissions. Even so, in our more emission intensive segments, we are phasing out lignite in favour of natural gas and biomass EP Cargo CZ EPIF CZ • Environmentally friendly sources were built only on the where possible, as was shown in the section of ’Generation back of huge state subsidies, which are being substantially EP Sourcing** EPIF CZ -** assets overview’. reduced (solar and onshore wind) and future development LokoTrain EPLI CZ might slow down; Generally speaking, GHGs are those currently defined by the LOCON Logistik & Consulting EPLI DE ISO 9001 United Nations Framework Convention on Climate Change • Important investments in associated infrastructure would and the Kyoto Protocol. These GHGs are: EP Cargo DE EPLI DE also be necessary to support this new system. (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF ) EP Cargo PL EPLI PL 6 As such, a fully-fledged transition towards purely renewable and nitrogen trifluoride (NF ). 3 and carbon free energy sources that will be able to provide SPEDICA GROUP COMPANIES EPLI CZ ISO 9001; FSA34 security of supply in reliable base load operations will be EOP & HOKA EPH CZ ISO 9001; FSA a long and financially intensive process. However, EPH is prepared to take an active part in this process in our markets of operation. Table 15 continues Selected EPH Group companies and their environmental certifications. * Complex environmental certifications are generally not standard in a standalone photovoltaic plants or wind turbines. ** Trading only companies, with no physical impact except office space.

Seriousness of our activities in the reduction of our environmental impact is underpinned by hard data along with a significant number of initiatives and measures that EPH and our Group companies have taken or are 33 EU Eco-Management and Audit Scheme. 34 Feed Safety Assurance. planning to undertake. ENVIRONMENT 134 PART 5 135

We recognise that we have an important Decarbonisation: European goals As an emitter of GHGs, EPH intends to make a substantial role to play in helping to achieve The reduction of GHG emissions is a key objective for European energy policy as well as in the energy policies contribution and support to these targets by setting tangible this objective and that we can make of the EU member states. The EU emissions were reduced by 23% between 1990 and the end of 201835. Following on reduction targets with a clear strategy how to achieve them. contributions by expanding renewable that, the ambition of the is to achieve a 55% reduction in GHG emissions by 2030 compared to 1990 as energy and by reducing the specific a baseline year. The EU is on track to meet its emissions reduction target for 2020 and is putting in place legislation to GHG emissions from our operations. achieve its 2030 target. Furthermore, some countries where we operate, such as Germany, have already made even more ambitious commitments.

35 During the writing of this report, only data for 2018 were available. Data are from the European Environmental Agency 2020.

EU Goals 2020 2030 2050

20 %

Reduction of greenhouse 55 % gas emissions (from 1990 levels) Climate neutrality

% of EU energy from renewables ? 32 % 20 %

% improvement in energy ? efficiency 32.5 % 20 %

Fig. 13 EU Energy and climate goals. ENVIRONMENT 136 PART 5 137 Examples of EPH’s key Measures and Initiatives in Sustainability Natural gas Biomass

A long-term partner for renewable energy With coal and oil gradually falling back and renewables on Biomass is a renewable source of energy and its combus- their rise there is a strong need for flexible energy sources tion offers economical alternative to fossil fuels. Biomass is to guarantee security of power supply in every condition. widely accessible and it can be used in cogeneration units Natural gas offers this flexibility and at the same time helps to produce both heat and power. In comparison to other to meet climate and environmental goals. In line with our renewable sources it is a stable source of energy since power commitments, we are purchasing natural gas power plants plants can create large stocks of pellets and provide constant and converting our existing lignite power plant into gas fired. output to the grid.

Natural gas is the only large-scale dispatchable source In the past two years, we have significantly increased our of cleaner energy. It is the only source of energy along energy production from biomass, mainly through acquisi- with renewables whose worldwide share in primary energy tions or conversions and we expect further growth in the increases. Based on the mentioned reasons, natural gas upcoming years.36 Decommissioning Focus becomes the largest single fuel in the global energy mix. of the most ineffective plants on co-generation In Europe, the higher natural gas demand from last years is expected to continue in coming decades.

2 GW hard coal power plant Eggborough was decommissioned Focus on the EU supported heat and electricity co-generation in

in 2018, reducing GHG emissions by 7 – 8 million tonnes on an the Czech Republic and Hungary, eliminating local GHG emis-

annualized basis compared to 2014. sions within city centers and maintaining overall fuel efficiency Natural gas provides following benefits: Biomass provides the following benefits: on 70 – 85% levels.

Protecting climate Available energy Compared to coal, power generation based on natural gas Except for deserts and polar areas, biomass is growing

emits up to 60% less CO2 and 80% less NOx. almost everywhere. In some urban areas biomass is even collected as a waste from gardens, parks or farms. Large amount of biomass is also produced by wood processing industry. Affordable energy Natural gas has consistently been one of the most affordable fuel available to European consumers. According to the European Commission’s report on energy costs and prices Cheap fuel source Acquisition of new biomass plants Security stand-by mechanism for heating, on average, one kilowatt-hour of electricity Thanks to the availability and versatility of the biomass costs 4 time more than one kilowatt-hour of natural gas. technology, the solution is much cheaper compared Acqusition of new biomass sources and transformation of old Commitment to respect the decision of the German government to other alternatives. hard coal power plants into biomass combustion greatly reduces to place two LEAG’s 500 MW units of Jänschwalde power plant our annual production of GHG emissions. For example, in 2019 in security standby mode in 2018 and 2019, respectively, saving

alone, we acquired 156 MW of new installed capacity through a further 8 million tonnes CO2-eq annually and preparedness to Clean air Gazel Energie (150 MW) and Fusine Energia (6 MW). Also, in contribute to a safe and affordable transition of the German energy Natural gas is a quick-win solution for better air quality. Carbon Neutral 2018 we finished conversion of Lynemouth, a former hard coal, system (Energiewende). The first part of this commitment was Compared to other solid fuels it emits up to 99.9% less In the long-term biomass fuels release the same into biomass with net installed capacity of 407 MW. In 2019, fulfilled in October 2018 and the second one in October 2019. particulate matter – microscopically small solid particles amount of carbon into the atmosphere as what was Lynemouth was fully operational over the whole year. damaging human respiratory system. absorbed by plants during their growth. Agreement to place the Buschhaus power plant in Germany in security standby mode from October 2016, 14 years prior to the end of its technical lifetime, which is expected to reduce CO -eq Stable renewable source 2 Globally available emissions by 30 – 35 million tonnes compared to original plans. In comparison to other renewable sources of energy, Rise of global LNG market leads to more competitive biomass is a stable source of energy, able to provide environment. LNG trade will more than double in year 2040 a constant supply to the grid. reaching almost 900 bcm. Even in Europe with developed pipeline infrastructure LNG plays a role in enhancing market liquidity.

Modernization of CHP fleet The future of gas Proven and probable global natural gas reserves can meet Complete modernization of the Czech CHP fleet and active demand for the next decades while new natural gas fields involvement in the closure of a coal fired source in the district are discovered. Natural gas can therefore serve not only as of Prague saving local GHG emissions. Feasibility studies are a bridge fuel for coming decades: given the strong potential currently performed to identify the most efficient refurbishment in renewable gases like biomethan, synthetic methane or programmes to enable a gradual transition of the Czech CHP hydrogen from power-to-gas facilities, natural gas industry fleet away from lignite to a mix of natural gas, biomass and will be a part of long term sustainable solution. communal waste.

36 More information about our installed capacity and production can be found in the chapter on renewable energy. ENVIRONMENT 138 PART 5 139

GHG emissions and emission intensity

Our operations have substantial differences in GHG emissions To enhance our reporting in transparency, beginning in this production and related emission intensities, which is given report for 2019, we have started disclosing scope 2 emissions by their country of operation, technology and fuel used. For of EPH. The scope 2 emissions represent the indirect impacts, example, this can be illustrated by the difference between our meaning they are from purchased electricity and heat used Czech, Hungarian and German operations. The GHG intensity for own consumption. In 2019, scope 2 emissions slightly of our German operations is relatively higher as lignite is the increased, however, in a context of increasing production, main fuel and use of co-generation is limited. However, the emission intensity in fact decreased. GHG intensity trend shows gradual decrease. Our Czech operations are primarily also lignite based, however they are As prescribed by the European legislation, the volume of emis- run in co-generation mode, producing heat and electricity sion allowances that are allocated for free, are being reduced simultaneously, which lowers their overall GHG intensity. each year. While free emission allowances will no longer be Finally, our Hungarian operations also run in co-generation allocated for power generation from 2020 onwards, EPIF enti- mode, but are based on gas which means that they have ties will still be eligible for free allowances to generate heat. comparably lower GHG intensity. The overall goal of the European Commission is to abandon the free allocation by 2027, so companies are pressured Total direct GHG emissions for EPH Group stood at 18.1 mil- to improve their operation, or to buy the allowances on the

lion tonnes CO2-eq in 2019, representing a small increase by market. We at EPH focus on both aspects, in order to hedge

0.26 million tonnes CO2-eq compared to 2018. However, the against the risk. GHG intensity of EPH operations decreased by approximately 12% in 2019. This significant reduction of our emission

intensity underlines our ability to operate our plants efficiently Graph 10 Indirect GHG emissions (scope 2). even in spite of new acquisitions in 2019.

Graph 9 EPH’s Direct GHG emissions (scope 1). Graph 11 Emission allowances usage. ENVIRONMENT 140 PART 5 141

GHG Emissions intensity Emission intensity in the EPH countries of operation 2017 2018 2019 2019 - 2018 % including heat component • GHG intensity for our operations in Germany was • GHG intensity for our operations in Hungary was 1,285 tonnes of CO -eq per 1 GWh in 2019, which is EP Infrastructure 2 258 tonnes CO -eq per 1 GWh in 2019, reflecting the a slight increase from 949 tonnes of CO -eq per 1 GWh in 2 2 fact that the CHP operations are efficient and powered Czech Republic 797 714 625 (89) (12%) 2018. However, we must take into account that this high by natural gas. emission intensity is mainly caused by the fact that our Slovakia 27 10 9 (0) (5%) remaining German portfolio consists of three lignite and • The GHG intensity of our operations in Italy was at Hungary 250 247 258 11 4% one hard coal power stations and some small renewable 505 tonnes CO -eq per 1 GWh in 2019, reflecting the sources. Nonetheless, direct GHG emissions have nearly 2 combination of efficient CCGTs, biomass plants and one Total – EP Infrastructure 564 544 474 (70) (13%) halved (decrease of 47%) which is connected to 61% conventional facility Fiume Santo. EP Power Europe drop in energy production compared to 2018. Absolute GHG emissions will continue to decrease significantly in • GHG intensity for our operations in Ireland was 392 tonnes France – – 352 352 the upcoming years as some assets are expected to be CO -eq per 1 GWh in 2019, reflecting the fact that our Irish placed in security standby mode and we assume lower 2 Germany 1,045 949 1,285 336 35% portfolio is formed only by one natural gas source. utilization of the power plants. UK 551 368 339 (30) -8% • GHG intensity for our operations in the Czech Republic • The situation is different for our operations in the UK was 625 tonnes CO -eq per 1 GWh in 2019, as it includes Ireland – – 392 392 where the GHG intensity is much lower and decreased 2 primarily lignite plants. by 8% from 368 tonnes CO -eq per 1 GWh 2018 to 339 Italy 529 510 505 (5) (1%) 2 tonnes CO -eq per 1 GWh in 2019. Reasons behind this 2 • GHG intensity for our operations in France was 352 tonnes Total – EP Power Europe 568 527 466 (61) (12%) reduction are the acquisition of the Ballylumford power CO -eq per 1 GWh in 2019, because it includes a balanced station and decommissioning of Eggborough power plant 2 portfolio of hard coal, natural gas, biomass, photovoltaics that stopped generation from hard coal in March 2018. and wind power plants. Total EPH 567 531 468 (63) (12%) Lynemouth power plant started production in April 2018 but with negligible emissions and SHB and Langage gas • Finally, our operations in Slovakia have the lowest GHG fired plants have stable low intensity (under 400 tonnes intensity 9 tonnes CO -eq per 1 GWh in 2019 due to their Table 16 GHG Emission intensity in EPIF, EPPE and EPH . CO -eq per 1 GWh each). 2 2 wide use of renewables, such as biogas generation and photovoltaics.

Our efforts to reduce our impact on the environment are reflected in a long-standing decrease in CO2-eq per GWh generated. ENVIRONMENT 142 PART 5 143

Percentages of EPH’s GHG management GHG management Segment Category 2015 2016 2017 2018 2019 CO2-eq emission in at EP Infrastructure at EP Power Europe 2019 Though most of our business from a financial perspective Most of the GHG emissions in EPH came from our businesses Tonnes of CO -eq 185,780 298,922 319,110 295,817 397,546 2.20% 2 sits within EPIF, their corresponding GHG emissions were within the EPPE sub-holding. Total direct GHG emissions

Gas Transmission Contribution to 687 676 664 663 735 only about 23% of the total EPH emissions. This underlines in EPPE increased to 14.0 million tonnes CO2-eq in 2019, / EBITDA (%) 41.7% 44.0% 36.2% 37.3% 35.3% the fact that within EPIF we operate predominantly pure which is an increase of 1.0 million tonnes CO2-eq in 2019 infrastructure assets with marginal carbon footprint and highly or 8% compared to 2018. This rise was mainly driven by

Tonnes of CO2-eq 4,336 3,039 3,738 3,134 2,419 0.01% efficient co-generation plants. new acquisitions and partially compensated by lower power production in Germany. Gas and Power Distribution Contribution to 426 424 551 461 528 / Approximately 90% of EPIF’s EBITDA is derived from gas EBITDA (%) 25.9% 27.6% 30.1% 25.9% 25.3% transportation, gas and electricity distribution and gas storage From the long term perspective, the GHG emissions in 2019 activities that are very marginal emitters of GHG emissions were higher compared to 2015 by 2.8 million tonnes of CO -eq, Tonnes of CO2-eq 2,631,275 3,808,156 4,293,365 4,469,483 3,612,572 19.97% 2 (approx. 3% of total EPH emissions). GHG emissions from or 26% (in 2015 GHG emissions stood at 11.2 million tonnes Heat Infra Contribution to 139 138 157 148 176 / these activities are effectively linked only to compressor sta- of CO2-eq) but this is a relatively small increase compared to EBITDA (%) 8.4% 9.0% 8.6% 8.3% 8.4% tions within our gas transmission, gas storage and exploration 118% rise in total net energy production. In 2015, total net businesses. In total, the infrastructure and distribution part of energy production was 13.8 TWh, but in 2019, this number Tonnes of CO2-eq 33,505 40,561 36,630 36,448 61,341 0.34% EPIF produces approximately 461 thousand tonnes CO2-eq increased to 30.1 TWh. Total emission intensity of EPPE has Gas Storage Contribution to 179 143 144 140 175 annualy. These GHG emissions were produced mainly by thus decreased from 809 tonnes of CO -eq per GWh in 2015 / 2 EBITDA (%) 10.9% 9.3% 7.9% 7.9% 8.4% eustream via its natural gas fuelled compressor operations to 466 tonnes of CO2-eq per GWh in 2019. This is a decrease

and amounted to 398 thousand tonnes CO2-eq in 2019. of 42% in 5 years. Tonnes of CO2-eq 27 1,086 2,448 44,975 14,213 0.08%

Renewable Energy Contribution to 0 -25 -34 37 119 Total direct GHG emissions for our EPIF companies thus On the other hand, in 2019, Lynemouth produced similar / EBITDA (%) 0% -1.6% -1.9% 2.1% 5.7% decreased by 15% or 0.7 million tonnes CO2-eq from the amount of electricity from biomass as in 2015 from hard coal, prior year, mainly due to decreased production in the Czech but with minimum carbon footprint in 2019 compared to 1.3 Tonnes of CO -eq 11,167,419 10,269,180 11,410,800 12,981,307 14,001,088 77.40% 2 Republic. Since materially, all GHG emissions arise from million tonnes CO2-eq in 2015. combustion, the trend in GHG emissions is also aligned with Generation and mining Contribution to 208 164 328 303 322 / the trend in energy consumption data between the two years. EBITDA (%) 12.6% 10.7% 17.9% 17.1% 15.5% Our acquisitions in the power generation segment Total energy consumption for EPIF was 16,207 GWh in 2019, already include significant low and zero carbon Total tonnes of CO -eq 14,022,316 14,420,944 16,066,091 17,831,164 18,089,179 100% decrease of 9% from 17,757 GWh in 2018. 2 assets as underlined by the following figures: Overall EPIF’s Total EBITDA37 1,637 1,520 1,801 1,743 2,051* Emission intensity EPIF is an environmentally responsible operator and we • 85% of the acquired installed capacity in Italy is based on continue to commit significant investment in order to further modern gas fired CCGT low carbon technology (83%) and Emission intensity of EPH 796.19 651.12 566.79 531.43 468.14 decrease our GHG footprint, including initiatives such as biomass (2%). Thanks to the acquisitions from 2017 of a complete changeover of the car fleet within EPH, whereby Biomasse Italia and Biomasse Crotone we added another most of the vehicles in the fleet are less than one year old and 73 MW of net installed capacity in biomass; Table 17 Emission management in our segments, comparing the tonne of CO2-eq and EBITDA. hence meet all of the latest GHG emissions criteria. • The acquisition of the coal power plant Lynemouth in the UK and its conversion into biomass unit with net installed capacity of more than 400 MW;

• The acquisition of Gazel Energie from Uniper increased our net installed capacity in renewables by 244 MW including 83.5 MW in wind, 10.5 MW in photovoltaics and 150 MW in biomass;

• In regard to Slovenské elektrarne, our equity consolidated company, 89% of the net installed capacity of the 3.8 GW 37 Stated total EBITDA includes holding entities, inter-segment elimina- acquired in Slovakia is carbon free technology. tions, small renewables in EPIF and logistics segment. Thus, the sum of all Total emission intensity EBITDA from segments listed will slightly differ from consolidated EBITDA. For full EBITDA disclosure, please refer to the Annex of this report and of EPPE decreased by 42% for full financial disclosure, please refer to the EPH annual report 2019. (*) This data has received limited aasurance from the independent in 2019 compared to 2015. auditing firm KPMG. ENVIRONMENT 144 PART 5 145

At the same time, we are well aware of the fact that our The change in emissions is influenced • 2023: Our Italian gas fleet to be supported by newly built In the following graph we present historical data for the period fleet also consists of a number of carbon intensive assets. by the following 800 MW capacity; 2015 to 2019 and forecast data for 2020 to 2030. Projections This is fundamentally a result of a lack of viable alternative of CO emissions and emission intensity are only indicative Effects persisting from the past are (all affecting EPPE): 2 technologies at scale in some areas where we operate. As • 2025: Italian government plans to close all hard coal- and are based solely on management estimates in respect a matter of fact, EPH has only acquired hard coal or lignite fired power plants by 2025. As such, EPPE assumes of closures and refurbishments of individual plants. This • 2015: acquisition of Eggborough, a coal power plant fueled power plants in markets that are or will physically that if feasible from the stability network and regulatory forward-looking information is subject to future management and EP Produzione, a gas plant caused an increase in be unable to secure stable power supplies from alternative perspective its 0.6 GW hard coal-fired plant in Sardinia decisions, market development as well as numerous risks and emissions; sources. We are convinced that rejecting the operation of coal have been refurbished to another source of fuel by then uncertainties. The projections also do not include emissions sources in markets with currently no physical alternatives is an from potential future acquisition targets or acquisition of • 2016: Buschhaus power plant transferred to security unacceptable gesture that ignores the basic needs of citizens The above-mentioned planned steps should lead to null controlling stakes in equity participations. Emissions from standby mode (no production and a drop in emissions) in such countries. The fact that EPH is prepared to take on installed coal capacity from 2025 in EPPE in all countries new development / conversion projects are only included with final decommissioning in 2020; the role of provider of this basic security of supply service in except for Germany where the timeline of plant closures is where there is a sufficient level of certainty that these projects such markets does not mean that we are not conscious that set by the government coal exit plan. will be realized (e.g. where the power plant constitutes an • 2017: acquisition of two gas and one coal plant and our role is only temporary and more importantly, it does not indispensable local source of electricity such as Fiume Santo smaller biomass stations, mainly the coal plant could mean that EPH will not actively contribute to the fulfilment In EPIF, there will be also significant changes in emissions plant in Sardinia). increase emissions in the following years (in case there of European or local environmental targets. after the contemplated conversion plans are realized. Between is some production); 2020 and 2025 the installed capacity in lignite and hard coal This forecast is based on the currently available information Each of the markets where we operate or where we aim is planned to be halved (from 1 GW to 0.5 GW) and further and assumptions and they of course might be changed in • 2018: Eggborough power plant was decommissioned; to establish our operations is very specific, with unique reduced to 0.2 GW in 2030. We plan to replace the coal-fired the upcoming years as the situation on the energy market is Lynemouth power plant started production after a coal- determinants of its current and prospective energy mix (e.g. units with a balanced portfolio of gas and biomass units and developing significantly. to-biomass conversion, which caused an improvement geography, natural resources, legislation). In order to preserve waste incineration plants and continue to supply heat and in emissions; the security of supply and economic continuity of a given power to our customers. country, it is our view that any change of the energy mix • 2019: acquisition of the French portfolio (namely coal needs to happen gradually whereby all market participants and gas) have the largest impact on the emissions we from legislators, through to energy companies all the way to consolidate; minor impact of the UK (Northern Ireland) financing institutions need to behave rationally and responsibly acquisitions, Irish (Republic of Ireland) acquisitions (both in order to make such a transition successful. At EPH, we coal and gas) and acquisition in Italy (biomass). have adopted a separate approach to each of our markets of operations and have carefully considered their respective energy market situation. Hence, all our actions and plans Main effects in the near future need to be viewed from the perspective of the respective • 2021: expected decommissioning of Mehrum, a Germany country’s prevailing energy market conditions and strategy hard coal power plant which was producing only negligible of local government. amount of electricity in 2019;

Decarbonization strategy of EPH and the future • 2022: we expect that our French hard coal assets (1.2 GW) outlook shall be decommissioned in line with the public announce- ments of the French government with respect to national As EPH is not only on lookout for new zero or low carbon decarbonization plans; generation assets, we also focus on the improvements, decom- missioning or transformation of current projects and power • 2023: Having secured a 10-year capacity market contract plants. We have set a concrete timeline of GHG reduction for a new open cycle gas turbine (OCGT) at Kilroot, the in EPH, by analyzing future acquisitions and reflecting on Group is currently assessing the replacement of its UK investments in our portfolio. We will focus mainly on EPPE in hard-coal operations with OCGT technology. Assuming this section, as most GHG emissions of EPH are related to the this is feasible from both a regulatory and an economic EPPE, because EPIF consists of primarily infrastructure assets. perspective, it is expected that hard-coal operations 38 (0.5 GW) will cease by the end of 2023; Graph 12 CO2 emissions and emissions intensity projections.

38 Data for 2015 to 2019 are historical, data for 2020 to 2030 are based on budgets and internal assumptions, which, however, could be changed due to actual market and legislation development as well as due to technical aspects of our plants. ENVIRONMENT 146 PART 5 147

Selected GHG reduction activities Selected GHG reduction activities and initiatives in EPIF and initiatives in EPPE In 2018 we decommissioned Eggborough power plant which Following the entry of the Buschaus plant into the security We are improving our energy efficiency and in turn emission played a crucial role in securing the electricity supply in the stand-by mechanism, we only own smaller combined heat United Kingdom intensity by placing a strong focus on heat and electricity UK market, with its extremely tight reserve margins. At the and power generation units in MIBRAG that are mainly cogeneration supported by the EU in particular through our On 12 June 2019, we acquired 100% stake in two large power beginning of 2017, Eggborough entered a capacity agreement producing power for our mining operations (please note that EPIF operations in the Czech Republic and Hungary. The heat stations. EP Kilroot Limited is mainly a coal-fired power station with National Grid. Under the scheme, the overall GHG emis- the majority of the machinery is powered by electricity and produced by some of these units is effectively a byproduct located in Northern Ireland with the total capacity of 665 sions were decreasing significantly in recent years: 0.5 million not by oil or diesel).

of electricity generation. EPIF owns four lignite fired heating MW including 141 MW OCGT unit and 10 MW battery stor- tonnes CO2-eq in 2018 compared to approximately 1.0 million

plants in the Czech Republic as well as three gas-fired plants age facility. However, both coal units in the Kilroot plant are tonnes CO2-eq in 2017, 2.1 million tonnes CO2-eq in 2016 and We also acquired 690 MW hard coal power plant Mehrum

in , Hungary. All of the units are co-generation expected to be decommissioned at the latest in September 4.7 million tonnes CO2-eq emissions in 2015. And finally, we in 2018 with production higher than 2 TWh and about 2 mil-

sources, meaning that they produce heat and electricity 2024 in line with the UK’s deadline for the coal phase-out. are considering a conversion of Eggborough into gas-fired lion tonnes CO2-eq of GHG emissions annually. However, in simultaneously allowing for much higher overall efficiency At the same time, the Kilroot brownfield site represents an power plant with potential 2,500 MW in installed capacity. 2019 the power plant produced only 0.8 TWh of electricity

(70 – 85%) compared even to the most efficient gas fired units opportunity for EPH to develop new OCGT generation capacity and 0.7 million tonnes of CO2-eq due to the current market (50 – 60%), which is also one of the reasons why cogeneration and additional battery storage as both projects follow UK’s In line with our strategy to build a sizeable and lasting presence situation (as production from less emission-internsive sources is widely supported by EU legislation. plan to decarbonise the power sector and strive for net zero in the UK market and diversify into the renewables segment, is preferred). by 2050. If carried out, then the hard coal technology shall we acquired Lynemouth power plant, a hard coal power plant, be decommissioned even sooner (2023). and converted it into biomass. Lynemouth power plant stopped EPH’s position in Germany is also influenced by our acquisi- burning hard coal in December 2015, which alone resulted in tion of a 50% non-controlling stake in LEAG. With regard to

a 2.7 million tonnes reduction in CO2-eq in 2016 compared to LEAG’s CO2 emissions, we plan to save more than 100 million

2015. The same amount of CO2-eq is thus saved every year tonnes in comparison with the previous owner until 2030. This thanks to the conversion. In 2019, only some 13 thousand amount corresponds to nerly two years of current production.

tonnes of CO2-eq were emitted, which corresponds to minor emission intensity of 6 tonnes of CO -eq per GWh. 2 France In July 2019 we successfully completed a transaction in which Italy we acquired Uniper’s activities in France. The generation In Italy we own and operate a fleet of four modern, efficient and portfolio is well diversified with a total capacity of 2,262 MW active CCGT power plants (total installed capacity of 3.1 GW), spread across CCGT, coal and biomass assets and solar and as well as one OCGT power plant in Sicily (0.2 GW) and one several wind parks. hard coal power plant in Sardinia (0.6 GW). From the end of 2017 we added two new biomass plants to the fleet: Biomasse The scope of the transaction includes mainly Uniper’s French Crotone (27 MW) and Biomasse Italia (47 MW out of which sales business, two gas-fired power plants in Saint-Avold 1 MW is photovoltaic). In 2019, we also acquired new biomass (Lorraine), two coal-fired power plants in Saint-Avold and plant of Fusine with installed capacity of 5.7 MW to boost Gardanne (Provence), the biomass power plant “Provence our existing biomass portfolio. 4 Biomasse” in Gardanne and wind and solar power plants.

However, the situation in Sardinia, where the Fiume Santo Ireland power plant is the key generation source on the island, is different and EPH believes that local production of hard On 29 October 2019, EPUKI acquired 80% shares in Tynagh coal power is currently hardly replaceable to ensure a stable Energy Limited. Tynagh Energy is a power producer in the and non-intermittent energy supply. However, the Fiume Republic of Ireland that owns low carbon 384 MW CCGT Santo power plant has also already decommissioned older power plant (dual fuel natural gas and distillate) in east units in line with valid legislation and environmental require- County Galway. The plant was commissioned in 2006 and ments. Fiume Santo is expected to remain as the backbone its estimated life span is approximately 30 years. The power of power supply in Sardinia for the foreseeable future with plant is in a unique position of being the only independent decommissioning potential in 2025 in line with the Italian CCGT plant on the Irish market and provides a flexible daily decarbonization plan. electricity production to the wholesale electricity market.

Germany In 2013, EPH decommissioned the Mumsdorf power plant, which caused GHG emissions within MIBRAG to decrease by

over 40% or approximately 800 thousand tonnes CO2-eq p.a. Efficiency 25 – 40 % 50 – 60 % 75 – 85 % In 2015, we agreed to voluntarily participate in the security Typical steam The most efficient Cogeneration stand-by mechanism that was being set up by the German condensing plants gas fired plants (EPIF Fleet) government in relation to our Buschhaus power plant. This (CCGT) effectively shortened the power plants’ lifetime by 14 years. The plant entered into the security stand-by mechanism in Q4 2016 and hence reduced GHG emissions by 2.7 million Carbon footprint 882 – 1,404 kg CO 342 – 414 kg CO 414 – 504 kg CO 2 2 2 tonnes CO -eq annually and approximately 30 – 35 million per MWh produced per MWh produced per MWh produced 2 tonnes CO2-eq for its remaining technical lifetime.

Graph 13 Overview of EPIF’s and EPPE generation efficiency. ENVIRONMENT 148 PART 5 149

Total SO2 emissions Air emissions SO emissions Specific SO emissions of thermoelectric plants How do we manage these? 2 2

We carefully monitor not only our CO2 emissions, but also The biggest atmospheric pollutants associated with our In 2019, we reduced our

all other important GHG emissions and dust particles. Due activities are sulphur oxides (SO2), nitrogen oxides (NOX), to the continuous improvements through modernisation and and particulate matter. SO2 emissions by 26%, NOx optimisation of our business processes, compared to the 2015 baseline we: emissions by 4% and dust Sulphur dioxide emissions (SO2)

• Reduced our SO2 emissions by 64% and improved our The combustion of sulphurous coal is the primary source emissions by 40% compared

overall efficiency in regard to emitted tonnes per GWh by of SO2 emissions. Two methods by which we can reduce our

80% compared to 2015. Compared to 2018, we reduced SO2 emissions are improving desulphurisation equipment to last year.

our SO2 emissions by 26%. and increasing the proportion of natural gas or renewable sources in our energy mix.

• Reduced our total NOx emissions by 23% and kept increasing the efficiency in the thermoelectric plants by Nitrogen oxide emissions (NO ) 56% compared to 2015. Compared to 2018, we reduced X

our NOx emissions by 4%. Nitrogen oxide is mainly generated by the combustion of nitro- gen contained in the air at high temperatures. For example, • Reduced our dust emissions by 65% and also increased the combustion of gas or coal in our power plants is connected

our efficiency by 80% compared to 2015. Compared to NOX emissions. This gives us a special responsibility to

to 2018, we reduced our total dust emissions by 40%. achieve further reductions in NOX emissions. In almost all large plants these pollutants are measured continuously through analysers installed on stacks, while in small plants it is done periodically through analysis and measurement campaigns Total NO emissions NO emissions x or by using statistical parameters. x Specific NOx emission of thermoelectric plants

Dust emissions Coal-fired power plants emit dust particles, despite highly sophisticated filters. However, we managed to reduce our dust emissions by 40% compared to 2015.

Mercury emissions Coal-fired power plants also emit small amounts of mercury. New European legislation has set limits for the first time on mercury emissions from large coal-fired power plants throughout Europe. Therefore, we are developing relevant technical measures to reduce our mercury emissions.

Total dust emissions Dust emissions Specific dust emission

Graph 14 Relevant air emissions and EPH’s improvements. ENVIRONMENT 150 PART 5 151 Case Study Case Study Activities of Plzeňská teplárenská Attitude of Plzeňská teplárenská in Air Protection to Emission Mitigation

DeNOx of boiler K3 The main goal of this investment is to meet the upcoming legislative Plzeňská teplárenská is the biggest producer of heat and electric requirements for air protection in the years 2020 and 2021, which set energy in Pilsen and in the whole region. It produces heat for heating

up new emission limits for NOx: as well as for water heating, electric energy and cooling energy for more than ¾ of households in Pilsen. It is the biggest heat supplier in Pilsen with a growing number of connection points.

Fuels used are lignite, biomass and communal waste. Biomass is co- incinerated with coal from 2003 (where biomass is approximately one third from the total volume) and also in a separate biomass boiler (from 2010).

Benefits from biomass Since 2016, Plzeňská teplárenská co-incineration as well as from has started to participate in disposal The new technology will allow to run the boiler with an NO x separate burning are: of municipal waste from the whole 3 concentration up to 135 mg/m . The expected benefit is reducing the region by transforming it into energy. NOx production of the boiler K3 from the current 235 tonnes per year • Lower consumption of fossil fuels; to 86 tonnes per year. The investment has been carried out since June The modern facility ZEVO Pilsen burning waste provides • Lower SO2 emissions and thus lower consumption ecological source of energy with capacity of 10.5 MWe 2019 and was finished in April 2020. The expected total investment of additives; and 31.7 MWth. Due to use of modern technology its costs are EUR 7 million. GHG emission production is very low. • Lower CO2 emissions;

• Green bonuses. DeSO – Intensification of wet scrub desulphurization x ZEVO is designed to burn The main goal of this investment is to meet the upcoming legislative 95 thousand tonnes of municipal requirements BAT/BREF for air protection, which set up stricter waste per year. emission limits for SO . The expected benefit is to increase the x In 2018, ZEVO Pilsen burned 93 thousand tonnes of waste desulphurizing unit efficiency to 97% (currently 87%), reducing the which was composed mainly from municipal waste and 3 3 concentration of SOx from the current 700 mg/Nm to 145 mg/Nm bulky waste. It was assumed to produce 400 thousand and reducing concentration of solid pollutants from the current 50 GJ of heat and 36 thousand MWh of electric energy. At 3 3 the end of the year, on 17 December 2019, an increased mg/Nm to 7 mg/Nm . The investment has been during 2020. The amount of incinerated waste from 95,000 tonnes to expected total investment costs are EUR 7 million. 105,000 tonnes was officially permitted for 2020. ENVIRONMENT 152 PART 5 153

Renewable energy Our renewable activities in EPPE and EPIF Renewable energy is proving to be a more significant topic for • EPPE operates three biomass power plants in Italy and Over the years, we have acquired a total of 791 MWe of renew- In 2019, EPH continued its efforts in increasing EPH. On the strategic level, as data show, we have invested in one biomass plant in the United Kingdom, which are able electricity sources in wind, photovoltaics, hydro, biomass its portfolio in renewable energy sources. Most of our various energy sectors. In recent years we have significantly responsible for the majority of our production from and biogas. During the course of 2019, we chose to further installed capacity in renewable sources is formed by increased the share of biomass in our portfolio and thank renewable sources (EPPE’s total net installed capacity invest in the generation of electricity from renewable sources, biomass and acquisitions of these sources show our to this renewables form about 6% of total EPH’s EBITDA. in biomass was 636 MW in 2019). As a complement, we which explains the spike in the installed capacity during the commitment to reduce our negative environmental However, even with the majority of assets being stationed in also operate 90 MW of installed capacity in wind energy period, mainly due to Plzeňská teplárenská’s biomass and footprint and improve sustainability of our portfolio. the traditional energy segment, we are aware of the important (in France and Germany). And another 25 MW is installed waste incineration, acquisition of new biomass sources in Italy role this area plays and will play in the future of the decar- in photovoltaic, battery storage and hydro units. and France and a conversion of existing coal power plant to In total, we produced over 3,387 GWh of electricity and bonisation process. 100% biomass plant in the United Kingdom. This underlines 170 GWh of heat from renewable sources in 2019, which • EPIF’s strategy focuses on smaller power plants (pho- our strategy and effort to produce energy more sustainable is a jump from 2018 and even larger from 2017. The main tovoltaic, wind, hydro, biogas and other) and biomass and bring balance to our energy mix. reason is that we acquired large biomass sources. Compared cogeneration. Altogether these represent almost 41 MW to the last year our electricity production from renewables of installed capacity. has increased by 1,190 GWh, which is an increase of 54%.

Installed capacity renewables Installed capacity renewables Net production in renewables Net production in renewables Electricity Heat Electricity Heat

Biogas Photovoltaic Biomass Biogas Photovoltaic Biomass

Biomass Wind Biomass Wind

Hydro Hydro

Graph 15 Installed capacity in renewables (electricity and heat). Graph 16 Net production in renewables (electricity and heat).

EPH’s installed capacity in renewable electricity sources Energy from renewable sources has a very important place increased from 531 MWe in 2018 to 791 MWe in 2019, in EPH’s strategy, as we are always on the lookout for future which is an increase of 49%. opportunities in this area. ENVIRONMENT 154 PART 5 155 Case Study Contemplated Construction of a Waste-to-energy Plant in Elektrárny Opatovice

Elektrárny Opatovice assesses possible development projects to partly The EPIF Group also owns and operates three solar power plants and replace lignite and hard coal with other sources. One of the possible holds a minority interest in another solar power plant and a majority alternatives is the production of heat and electricity energy from interest in one wind farm in the Czech Republic. The Group also municipal waste. operates two solar power plants and a biogas facility in Slovakia. In the segment of heating, majority of production comes from Plzeňská As part of the 2019 preparation process, an analysis of the amount of Teplárenská. produced waste in the region was carried out. Even after taking into account trends in waste management, it is possible to consider the We are not only operating some of the renewable power plants, but we need for the region to deal with up to 300,000 tonnes of waste per support their development in other ways. In the subsegment of power year that would otherwise end up in landfills. distribution, we are bound by law to connect the renewable electricity sources to the grid, thus facilitating and allowing them to produce The main benefits of the project include also ecology as modern electricity. In Slovakia, through SSE, we are also obliged to buy the waste-to-energy plants produce less emissions than existing coal electricity produced by these operators and help them get integrated sources. This is also the reason why the possible construction of a into the electricity grid. We also help our customers to install their own waste-to-energy plant in EOP is included under EOP environmental small renewable plants, such as photovoltaics. projects. As a complement to EPPE’s electricity production we operate operate The whole project is currently in the preparatory phase. Successful a 10 MW storage within Kilroot Advancion Energy Storage Array, implementation of the project will require support from cities and which is the first grid scale operational battery storage unit in Ireland. municipalities as well as support from the general public. The battery storage helps to balance supply and demand in the grid and supports the stability of the Northern Ireland system. Storage makes existing renewable and thermal generation far more efficient by enhancing power supply enabling more efficient dispatch of power and increasing the ability to integrate intermittent renewable energy sources like wind and photovoltaics. ENVIRONMENT 156 PART 5 157

Mitigation of Environmental Impact

Efforts to reduce discharge of pollutants, careful disposal Water management in EPH Water withdrawal from our operations increased to 3,028 mil- The vast majority of water extracted is sourced from surface of hazardous material, cleaning of contaminated sites and lion m3 in 2019 (2,404 million m3 in 2018). Since water is water sources (sea or river) with smaller amounts from ground Water is extremely important to our operations for: support of biodiversity have become a core of our business overwhelmingly used for cooling in closed flow-based cooling water sources, mainly in EPPE, and minor amounts sourced operations. in our plants, the trend in water discharge from our opera- from the municipalities in both EPIF and EPPE. • Heat distribution where water is the main medium; tions followed the same trend as withdrawal, increasing to 2,920 million m3 in 2019. This year-on-year increase in water • Coal mining; withdrawn and discharge was caused mainly by higher power Water production. Overall water efficiency of EPH has decreased • Production of electricity and heat. by 9% in 2019 compared to 2018. We fully understand the crucial role of water in the environ- ment, be it on the global or local scale. The efficient use We aim to reduce our water footprint through several methods of water is a top priority for all our operations and our aim including the reuse and recycling of water, more intensive is to always consume the least amount of water required use of pumped water from opencast mines and collected to run our production processes. For example, we strive rainwater, as well as recovering and re-using process water to ensure that our use of water creates minimal impact on from operations. Our internal wastewater treatment and natural resources when we supply our thermal power plants continuous monitoring of the process ensure that potential with cooling water. We also endeavour to provide the best contamination is eliminated. We provide verifiable compliance protection for aquatic habitats and other ecosystems against with the statutory threshold values, enabling us to avoid possible adverse effects. negative impacts on nature and human health.

Annual change Total 5 year Unit Category 2015 2016 2017 2018 2019 between Average 2018 and 2019

Quantity of water mil. m3 912.8 1,377.3 2,004.9 2,404.0 3,028.3 624.3 1,945.5 withdrawn

Quantity of water mil. m3 794.4 1,256.7 1,894.7 2,295.0 2,919.9 624.8 1,832.1 discharged

Total net energy GWh 17,332.0 21,622.4 27,712.6 32,922.5 37,683.0 4,760.5 27,454.5 production

Electricity and heat % / 24.8% 28.2% 18.8% 14.5% n/a n/a production increase

GWh per mil. m3 % 18.99 15.70 13.82 13.70 12.44 -1.3 14.93 generated*

Net water efficiency % / -17.3% -12.0% -0.9% -9.2% n/a n/a Quantity of water withdrawn Quantity of water withdrawn increase** Quantity of water discharged Water efficiency in GWh per mil 3m Table 18 Water management efficiency at EPH. * Indicator is calculated across whole EPH portfolio, which provides a slightly biased results (as this also involves water from mining operations). Graph 17 Quantity of water withdrawn and water management efficiency at EPH. ** Efficiency increase is calculated as a year-to-year change in Net energy production / Quantity of water withdrawn.

We recognize that climate change poses a serious risk as severe water scarcity might occur. In order to minimize the impact of this negative factor, we are putting serious effort into reducing our water usage. ENVIRONMENT 158 PART 5 159 Case Study A Lake in Sight – the Cottbuser Ostsee will be the Largest Pit Lake in Germany

Removing and dismantling by an underground pipeline. A fish screen on the diver- sion dam meets the ecological requirements for fish the large-scale equipment protection. In order to be able to begin with the landscaping of the large- Filling of the lake is steered over the flooding management The Cottbus-Nord opencast mine restoration works are under way scale Cottbuser Ostsee project, the complete infrastructure system of the Lusatian Lakelands. The extraction of water in order to convert the former mine into the Cottbuser Ostsee lake of the opencast mine and all large-scale equipment were from the Spree River is only carried out if there is sufficient dismantled, scrapped or disassembled for resale immediately that will expand recreational opportunities in the Cottbus region, water in the river after primarily ensuring the interests of after the end of the coal mining. The dismantling of the the people living along the Spree River and the protection and create new nature conservation areas. railway facilities alone comprised 30,000 tonnes of track of flora and fauna. Less than 20% of the lake water result ballast, 18,000 sleepers, 26 points, 11 kilometres of tracks from rising groundwater. and four bridges. The overburden conveyor bridge with its From a mine to Cottbuser Ostsee lake bridge excavators and two bucket chain excavators formerly An outlet structure will integrate the Cottbuser Ostsee lake used in the pit were scrapped. into the regional water network via the Schwarzer Graben The Cottbus-Nord opencast mine, together with the neighbouring ditch. The steerable structure is to be erected from 2021. Jänschwalde opencast mine, supplied the Jänschwalde power plant with A fish ladder with several basins ensures ecological continuity lignite for over three decades. Preliminary preparations for opening up Lake basin created and banks secured for aquatic life. the opencast mine began in the mid-1970s. The first coal train entered the power plant on 8 April 1981, the last one on 23 December 2015. Day by day around 140 earth-moving machines were in use at the Cottbuser Ostsee lake construction site to move Mining activities in Cottbus-Nord opencast mine ended according a total of 20 million cubic metres of earth. The soil removal Good quality lake water to plan with the depletion of its approved lignite reserves. It was the ensures a two metres minimum water depth of the lake. first opencast mine in the Lusatian mining district to close after 1990. With rapid flooding and the high proportion of Spree River The excavated earth masses were used to fill the former With the decommissioning of mining and conveyor complexes the water it has been calculated that the quality of the lake coal railway exit and to shape the future Bärenbrücker Bay. site entered a new phase of post-mining landscape restoration. The water will be sufficient, needing no additional improvement measures. The pH value is estimated to be 7.5 to 8. envisioned Cottbuser Ostsee lake will soon be a reality: only a few Concurrently, the bank profiling took place in the south, kilometres from the centre of Cottbus a 1,900-hectare lake is being west and north of the lake. In the east, the shore zones created and will be completed by the mid-2020s. The most recent and offshore islands created with soils deposited using inland water body addition to the Lusatian Lakelands will be the largest large-scale opencast mining equipment were stabilised Communal projects lake in the Federal State of Brandenburg and Germany’s largest pit by vibrocompaction measures in order to create a safe lake. Besides tourism and water sports, the Cottbuser Ostsee will be post-mining landscape. Between 2012 and 2019, a total The number of ideas developed to expand the tourist valuable to the fisheries sector. The eastern banks have been reserved of 46 million cubic metres of soil were compacted. infrastructure of the lake are an indicator of the great inter- for nature conservation. est the people from the surrounding areas are showing. In 2017, LEAG organised an open day of the construction They are planning ports or water sports facilities, getting In 2018, the preparation work for flooding the Cottbuser Ostsee site on the future lake bed. Thousands of visitors seized the involved in the cycle path network around the lake or are was completed. Extensive construction volumes can be seen in this opportunity to inform themselves about the construction already thinking about guidelines for the navigability. The impressive project. measures with guided tours that were organized. first of these ideas is already becoming reality: in 2018, the city of Cottbus started the construction work of the quay wall of the future city harbour. Parameteres of Cottbuser Ostsee Infrastructure ready for flooding

Future water level: between 61.8 and 63.5 m above sea level The water level will be in accordance with the original Oasis for nature protection hydrological situation before mining north-east of Cottbus. The Cottbuser Ostsee lake is flooded with water from Target water level: 62.5 m above sea level The future east banks of the Cottbuser Ostsee lake will the Spree River which comes via the Hammergraben at be characterized by diverse features, islands and shallow the Lakoma Weir. For this purpose, a new diversion dam waters. There is considerable potential for developing Final lake volume: 126 million cubic metres was built on the watercourse and an inlet structure on a wide variety of habitats and making it a suitable nature the lake’s embankment. The two buildings are connected conservation area. Shore length: 26 kilometres ENVIRONMENT 160 PART 5 161

Waste and effluents

The main principle underlying our approach to waste man- EPIF also recorded an increase of waste generated, which was agement can be summarized as ’avoidance, recovery and associated mainly with activities of eustream (extension and disposal’. Our waste generation is mainly associated with reconstructions of compressor stations), NAFTA (drilling and

mining, generation, as well as with construction waste, which demolitions) and SPP-D (reconstruction of gas distribution Waste other than by-products – Total production is inert in its effect. network pipelines). Non-hazardous waste

Through our efficiency programmes we firstly endeavour to One of our main achievements in 2019 is that we have reduced avoid generating waste in the first place. Waste that cannot our production of hazardous waste by 1,828 tonnes to the be avoided is subject to recovery wherever possible. Recovery level of 5,500 tonnes, which is a 25% decrease in comparison mainly concerns materials which can be reused in construc- to year 2018. tion (as in the case of combustion ash; regenerated into such things as oils and batteries or recycled as in the case of some Waste management in EPH types of ash and gypsum). When analysing the total waste generated by the EPH and its Last, but not least, where recovery is not possible, we aim subsequent management, it is necessary to note that data to continuously increase the percentage of hazardous and include overburden, which is a soil removed before extraction Hazardous waste non-hazardous waste sent for recycling, to minimize waste of coal deposits. As such, overburden is not a waste in its going to landfill as much as possible. Waste products that own sense, but an inert soil, that has its uses in recultivation cannot be recovered are disposed of at the locations that are and reclamation. most suitable, depending on the type of material. Accordingly, all residual waste is disposed of in compliance with statutory The company responsible for our mining operations MIBRAG Graph 18 Total Waste generated at EPH. regulations. is a large producer of mentioned overburden. Only in 2019 it produced 234.8 thousand tonnes of waste, which is 74% Total waste other than byproducts was equal to 317.5 thousand of all EPH’s produced waste production. More than half of this tonnes in 2019, which is 11% increase from 2018. The increase amount is overburden, which fits the category “Other”, and is was mainly driven by EPPE and its acquisitions of new power used in reclamation and recultivation of mining sites. Also, it is plants in Italy, United Kingdom and in the Republic of Ireland. worth mentioning that we increased the total non-hazardous waste recycled by 37% compared to the 2018.

Hazardous waste Non-hazardous waste by means of disposal by means of disposal

Our waste generation slightly increased from the last year due to increase in non-hazardous waste primarily from new acquisitions. However, more waste was recycled and used in energy recovery, thus improving the overall environmental impact and lowering waste dump in landfill Recycling Landfill by 286 tonnes (or by 18%) in hazardous waste. Graph 19 Waste management at EPH. Other ENVIRONMENT 162 PART 5 163 Case Study Our Efforts in Improving Waste Management: Waste-to-energy

Plzeňská teplárenská Byproducts are a great way of reducing Byproducts generation

Plzeňská teplárenská operates the waste-to-energy facility ZEVO our waste in the first place and creating In addition to waste, we also generated 1,560 thousand tonnes of byproducts in 2019. As we are frequently able to Plzeň, an ecological source that can use a wide range of waste and further value for our stakeholders. sell the byproducts for further commercial use when they are convert it into energy. Heat energy occurring during the combustion collected from our facilities, we report waste and byproducts separately. They are used in various business segments, process is subsequently used to supply heat to the territory of Pilsen primarily in construction. By using byproducts, we are actively city and for the production of electrical energy. reducing demand for primary construction materials, which results in a reduced carbon imprint coming from mining and associated logistics, as byproducts are often used locally.

Creation of byproducts translates to lower volumes of waste Elektrárny Opatovice that are sent to landfills. The byproducts are all subject to regular certification process and tested by an authorized Elektrárna Opatovice is analyzing the possibility of building a waste- party for content of potentially dangerous elements such as to-energy power plant, to phase out some of its coal production heavy metals. All products have historically complied with the prescribed norms. capacities.

United Energy

United Energy is entitled to use the label of Ecological Firm for its responsible approach to the environment, used product take-back and waste sorting.

Graph 20 Byproduct generation. ENVIRONMENT 164 PART 5 165 Case Study Utilization of Secondary Energy Products

Our heat and power generation assets generate , slag and Biodiversity and recultivation gypsum from the combustion of lignite as secondary energy products Protecting biodiversity in the areas where we operate is also as in the segments of exploration and drilling where we are used either for the reclamation and adjustment of terrains or further a top priority for our organization and where relevant, the obliged to restore these sites to their original state. This is sell these products particularly for construction purposes. direct and indirect impact of our activities on local ecosys- also required by the law, as for instance, according to the tems and biodiversity is assessed with the aim of not only German Federal Mining Law, a mining company is obliged minimising any negative footprint, but also to play an active to re-cultivate/reclaim all the land used for mining purposes The companies made sure that all secondary energy products were role through engagement in different projects supporting after discontinuation of mining operations. The requirements and protecting ecosystems including endangered species. to be met for this purpose are set forth in a comprehensive certified and they continue to explore other options for their use. The potential risks in planning and operations in regard to framework operations plan and compliance is monitored by the preservation of biodiversity are monitored and evaluated the mining authorities. on a regular basis. For that purpose of recultivation, special recultivation related To be a responsible user of natural resources, we have a clear provisions, have been created. All companies in EPH Group commitment to reclaim all lands that have been affected have regularly updated plans and contingencies for the site’s by mining. EPH thus pays attention to the recultivation closure. This is also reflected in the rehabilitation provisions Overview of secondary energy products: projects at the end of a power plant’s lifetime period as well that must be recognised for these activities. Ash

Used mainly by construction companies for production of concrete, cement or bricks. Utilization of coal ash in the construction industry saves the primary materials which would be used instead (limestone, clay, sand). The major customers sourcing ash from our companies include concrete plants and cement plants. The ash from pure biomass combustion is also used by farmers as a fertilizer

Slag

Primarily used for production of bricks and underlayment of roads. Slag is used as a substitute for gravel which would have to be extracted instead. Key customers comprise of brick plants and road construc- tion companies

Gypsum EPH is well aware of the importance of biodiversity, Used to produce plasterboards or as a gypsum agricultural fertilizer (reduces gypsum volumes which need to be mined) the value of ecosystems and of the environmental benefits they provide places, and great importance on the responsible management of natural resources during all stages of our operations. ENVIRONMENT 166 PART 5 167

In the 2019, the total provision for restoration Case Study and decommissioning was EUR 1,082 million. Recultivation Done by MIBRAG

In general, rehabilitation provisions are primarily These provisions are recognized for the following The planning of the new landscapes after mining begins long before connected to following companies: restoration activities: the first excavator shovel extracts lignite. Planning of recultivation Company EUR Mil. • Dismantling and removing structures; develops in close dialogue with neighbors and in cooperation with specialist authorities for environmental protection as well as EPIF • Rehabilitating mines and tailings dams; agriculture and forestry. The focus is on the return of an ecologically Nafta 90 • Dismantling operating facilities; intact landscape. In many cases, the mining company creates NAFTA Germany 66 • Closure of plant and waste sites; even more forest and water areas, scenic diversity and habitats for POZAGAS 12 endangered animal and plant species than before the beginning of • Restoration and reclamation of affected areas, incl. soil Eustream 6 preparation and treatment for subsequent agricultural the mining. and forest use. SPP Storage 4 At MIBRAG, a team of environmental engineers as well as farmers and foresters ensure that all planned work is carried out carefully. Company EUR Mil. During this time, the soils are upgraded for later agricultural use by

EPPE means of a specific recultivation crop rotation. In addition, drainage ditches are being dug, path systems are being created and field trees MIBRAG 355 are being planted. Gazel Energie Generation 184

EP Produzione 116 In total, MIBRAG group recultivated the following areas in 2019 and 2018: Helmstedter Revier 90

Fiume Santo 83 2019 2018

Eggborough Power Limited 13 Land creation and regeneration (ha) 68.6 88.3

Agricultural 35.1 24.5 Kraftwerk Mehrum 12 Forest 26.4 22.7 Lynemouth Power Limited 12 Other uses for nature protection 4.1 33.2

Other uses 3.0 7. 9 ENVIRONMENT 168 PART 5 169 Case Study Case Study What exactly do we do to improve Biodiversity support through the biodiversity of our environment? the EPH Foundation

NAFTA – waste pond recultivation In addition to the activities of our subsidiaries, we contributed to a wide array of projects in the field of biodiversity through the EPH To minimize its environmental footprint, NAFTA is obliged to restore Foundation. EPH Foundation organizes a special donation programme the sites affected by gas drilling activities to their original state. As an “Na Prirodno” (Naturally), that supports projects in the area of example, a waste pond in Moravany was used by NAFTA to accumulate biodiversity protection and restoration. In 2019 alone, we contributed drilling related waste. The accumulated sediment was subsequently and supported 26 projects in nature protection and education. Just stabilized (using a special binding substance). The stabilized sediment to name a few: was then covered by several layers to prevent mixing with surface and underground waters. Grass was then planted on the top layer. The site has been continuously monitored since project finalization. Restoration and revitalization of the river Váh

With the civic association NaturAqua, we contributed to restoration and revitalization in third part of the dead arm of the river Váh. The aim of the project was to revive the dead arm in terms of fish population (create environment for fish reproduction) and expand the rest zone for inhabitants of the nearby village. The project involved restoration of the water area by deepening it and modifying the surrounding by planting trees typical for this environment and by improving area around the water by installing new benches and information boards.

Effort to protect and restore nature

We supported the civic association Permoníci, in their effort to protect and restore nature. During the whole year they conducted many events in which they cleaned areas from illegal dumps and took care of nature. For example, in cooperation with the Municipal Forest in Bratislava, volunteer work was done in the locality of Little Carpathians. In the plan was cleaning the Vydrica stream from infested trees, restoration of riverbed, treatment and removal of weedy plants. Another thing worth mentioning was removal of illegal dump in the area of Krpáš, which included around 480 tires.

Cave rescue group

We also contributed to Cave rescue group – Slovak Karst which cleaned underground watercourses. These form the predominant source of drinking water in the Rožňava district and in Košice okolie district. Therefore, the protection and purification of these water resources is extremely important. Governance

The following section describes EPH’s approach to corporate governance and basic principles ensuring responsible behavior of employees and the management in everyday business activities. EPH and its subsidiaries understand the impact of their business operations and their contribution to the economy and sustainable growth. We gain this understanding through the establishment and regular review and monitoring of internal governance processes, related policies, and on-going stakeholder engagement. GOVERNANCE 172 PART 6 173

Material Topics EPH Shareholders

Fair Conduct Procurement practices Risk and crisis management Change in EPH shareholder structure

In 2017, following the sale of a minority shareholding in EPIF, Compliance Supply chain management Risk management changes occurred in the shareholder structure of EPH whereby the current shareholders of EPH concluded a series of trans- Policies and specialised committees Investigations, litigations and sanctions actions, through which Daniel Křetínský (94%) and selected members of the existing management of EPH (6%) became Business Ethics Lobbying and political engagement sole owners of EPH. No major changes in EPH shareholder structure occurred in 2019.

Table 19 Material topics in the governance section.

Governance is one of the crucial pillars of corporate The governance of EPH is based on a two-tier management Introduction sustainability. By developing business principles in line with EPH Management structure consisting of the Board of Directors and the the long-term strategy and introducing various policies to Supervisory Board. The Board of Directors represents the enforce these principles, companies are able to transpose EPH Group in all matters and is responsible for its day-to- their long-term strategy into their everyday business activities. day business management, while the Supervisory Board is EPH Sustainability structure centralises responsible for the supervision of the EPH Group’s activities The first section is focused on the corporate governance and of the Board of Directors in its management of EPH and the monitoring and enforcement of ESG structure, introducing our top management, and showing in such matters as defined in the Czech Corporations Act and how we manage ESG issues at EPH. The following sections the Articles of Association. Under the Czech Corporations matters at the Group level. describe the management approach and provide data related Act39, the Supervisory Board may not make management to identified material topics: Fair conduct, Procurement decisions. However, certain matters, defined below, are subject practices and Risk and Crisis management. to the approval of the Supervisory Board. The EPH Goup has established a Risk Committee, Investment Committee and Compliance Committee.

Furthermore, in order to emphasize risk management within EPH, particularly resulting from the acquisition growth and completion of several recent major transactions, EPH has created a centralised Risk Management role, which supervises all activities within the entire portfolio of EPH from a Group risk perspective.

39 Sbírka zákonů České republiky; Obchodní zákoník, Oddíl 3; Orgány společnosti, § 125–§ 140. GOVERNANCE 174 PART 6 175

Corporate governance on the sub-holding Level

EPH Board of Directors EPH has undergone certain reorganisation measures

The Board of Directors has four members whereas the Name Position during 2016 through which two separate sub-holdings Chairman of the Board of Directors serves simultaneously as Daniel Křetínský Chairman and Chief Executive Officer the Chief Executive Officer of EPH. The Board of Directors is EPIF and EPPE emerged. the EPH Group’s statutory body, which directs its operations Marek Spurný Member and Chief Legal Counsel and acts on its behalf. No-one is authorised to give the Board of Directors instructions regarding the business management Pavel Horský Member and Chief Financial Officer All the legal reorganisation steps within EPIF have been completed of EPH, unless the Czech Corporations Act or other laws or Jan Špringl Member of the Board of Directors and the formation of the EPPE subholding has finished. regulations provide otherwise. The business address of all members of the Board of Directors is Pařížská 130 / 26, 110 00 Prague 1, the Czech Republic. Table 20 EPH Board of Directors. We have also progressed in our aim to establish a separate layer The following table sets forth the members of EPH’s Board of statutory bodies and executive management responsible for day of Directors as at the end of 2019: to day operations as well as key business decisions. Given these two businesses substantially cover all assets of EPH, we will still maintain the decision-making capability either through personnel representation in the relevant bodies or a list of reserved matters requiring the approval of EPH as main shareholder. EPH Supervisory Board

The Supervisory Board of EPH has three members elected by Name Position the General Meeting of shareholders. The business address of all of the Supervisory Board members is Pařížská 130 / 26, Petr Sekanina Chairman of the Supervisory Board 110 00 Prague 1, the Czech Republic. Tereza Štefunková Member of the Supervisory Board

The Supervisory Board is responsible for the revision of the Martin Fedor Member of the Supervisory Board activities of the EPH Group and of the Board of Directors in its management of EPH, and which resolves such matters Table 21 EPH Supervisory Board. as defined in the Czech Corporations Act and the Articles of Association. The Supervisory Board’s powers include the power to inquire into all documents concerned with the activities of companies withing the EPH Group, including inquiries into their financial matters, review of the year-end financial statements, including profit allocation proposals.

The following table sets forth the members of the EPH Supervisory Board as at the end of 2019: GOVERNANCE 176 PART 6 177

EP Infrastructure management Profiles Overview of EPIF’s management is shown in the table below as at the end of 2019:

Board of Directors of EPIF Supervisory Board of EPIF

Name Position Name Position

Daniel Křetínský Chairman of the Board of Directors Jan Špringl Chairman of the Supervisory Board

Vice-chairman of the Board William David Vice-chairman of the Supervisory Gary Mazzotti of Directors George Price board

Vice-chairman of the Board Jan Stříteský Member of the Supervisory Board Jiří Zrůst of Directors Rosa Maria Member of the Supervisory Board Stéphane Louis Brimont Member of the Board of Directors Villalobos Rodriguez

Milan Jalový Member of the Board of Directors Petr Sekanina Member of the Supervisory Board

Pavel Horský Member of the Board of Directors Jiří Feist Member of the Supervisory Board

Marek Spurný Member of the Board of Directors Table 23 Supervisory board of EPIF.

Table 22 Board of directors of EPIF. Daniel Křetínský Marek Spurný

Chairman of the Board of Directors and Member of the Board of Directors and Chief Executive Officer at EPH Chief Legal Counsel at EPH

Chairman of the Board of directors and Member of the Management Board EP Power Europe management Chief Executive Officer at EP Infrastructure of EP Infrastructure

Overview of EPPE’s management is shown in the table below as at the end of 2019: Chairman of the Board of Directors Vice-chairman of the Board of Directors of EP Power Europe of EP Power Europe

Board of Directors of EPPE Supervisory Board of EPPE

Name Position Name Position Mr. Křetínský has been the chairman of the board of directors Mr. Spurný has been a member of the board of directors Daniel Křetínský Chairman of the Board of Directors Ivan Jakabovič Member of the Supervisory Board at EPH since December 2013. Through his previous role as a since December 2013. At the end of 2019, Mr. Spurný is the partner in the J&T Group he was also involved in the founding chief legal counsel and a member of the board of directors Vice-chairman of the Board Pavel Horský Martin Fedor Member of the Supervisory Board of EPH, where he has served as a chairman of the board of of EPH and holds multiple positions in boards and manage- of Directors directors since 2009. At the end of 2019, Mr. Křetínský also ments of companies within the Group, as well as outside the Miloš Badida Member of the Supervisory Board Vice-chairman of the Board served on multiple boards of companies within the Group, Group, such as VESA Equity Investment S.à r.l., EP Global Marek Spurný as well as outside of the Group in companies both affiliated Commerce GmbH, Czech Media Invest a.s. and AC Sparta of Directors Table 25 EPPE Supervisory Board. and unaffiliated with EPH, such as Czech Media Invest, a.s., Praha fotbal, a.s. Vice-chairman of the Board EP Global Commerce a.s., EC Investments a.s. or AC Sparta Jan Špringl of Directors Praha fotbal, a.s. Between 1999 and 2004, Mr. Spurný worked for the Czech Securities Commission (the capital markets supervisory body Vice-chairman of the Board Tomáš David As at the end of 2019, Mr. Křetínský is a direct shareholder at that time). Mr. Spurný holds a law degree from Palacký of Directors of Czech Media Invest a.s., EP Global Commerce a.s. and University in Olomouc. Leif Timmermann Member of the Board of Directors EC Investments a.s., an indirect shareholder of EPH and EP Industries, a.s. and through them, Mr. Křetínský is also an Jiří Feist Member of the Board of Directors indirect shareholder of their respective subsidiaries.

Tomáš Novotný Member of the Board of Directors Mr. Křetínský holds a bachelor’s degree in political science Brendan Massam Member of the Board of Directors and a master’s and doctoral degree in law from Masaryk University in Brno. Table 24 EPPE Board of Directors. GOVERNANCE 178 PART 6 179

Profiles Fair Conduct

Enhancing the Group’s ethical business conduct through These policies contain the following principles preventive mechanisms, such as specialised committees and guidelines: and internal policies, helps to promote inclusiveness and • Receipt or payment of bribes including facilitation pay- increases access to justice regardless of status, gender or ments is strictly prohibited; age. This topic is especially important to internal stakehold- ers, such as employees and the management. Nevertheless, • Acceptance of gifts and donations including charitable it has a great impact on EPH business partners, customers, donations is regulated; authorities and local communities, expecting transparency, regulatory compliance, comprehensive risk management and • KYC procedures are required to be undertaken for busi- high ethical standards. ness partners;

• The so called four-eyes principle is applicable for business Compliance transactions, and cash payments above a predefined cash limit; EPH and its subsidiaries always act in accordance with the current local legislation and the Group’s appropriate cor- • EPH or its employees do not establish or maintain busi- Pavel Horský Jan Špringl porate policies and cooperate with local regulators. Going ness relations with persons, entities or countries that beyond mere compliance, we have our own corporate and are subject to economic or financial sanctions, trade local policies in place aiming to ensure the excellence of our embargoes or other restrictive measures imposed by the Member of the Board of Directors and Member of the Board of Directors of EPH responsible Operations. To assure even greater focus and best European Union, the United Nations, the United States Chief Financial Officer at EPH practice governance, EPH installed Mr. Gary Mazzotti as the of America, or the United Kingdom; independent member of the boards of directors of EPIF and Chairman of the Supervisory Board EPPE in charge of the ESG agenda. • All employees and directors are obliged to observe anti- Member of the Board of Directors of EP Infrastructure -trust laws and are aware of serious consequences that of EP Infrastructure any infringement of anti-trust laws may have. Vice-chairman of the Board of Directors and Policies and specialised Vice-chairman of the Board of Directors Chief Executive Officer of EP Power Europe of EP Power Europe committees The EPH level policies apply to all EPH subsidiaries.

Governance Policy Established Mr. Horský has been a member of the board of directors at Mr. Špringl has been working for EPH since 2009 and serves level EPH since December 2013. as a member of the board of directors of EPH. At the end of Anti-corruption and anti- 2019, Mr. Špringl was a chairman of the board of directors 2017 EPH bribery policy At the end of 2019, he is a chief financial officer of EPH and of NAFTA a. s.; vice-chairman of the board of directors of EP holds a number of other positions within the Group as well Power Europe, a. s., and holds numerous positions in boards of Anti-money laundering 2017 EPH as outside the Group, such as EP Industries, a.s., EP Global companies within the Group as well as outside of the Group. policy Commerce GmbH or Mall Group a.s.. At the same time, Mr. Horský serves as a member of the Risk Committee of EP Mr. Špringl holds a master’s degree from the Faculty of Sanctions policy 2017 EPH Infrastructure, a.s. Prior to joining EPH, Mr. Horský held a Business Administration from University of Economics in Anti-trust law policy 2017 EPH market risk advisory position at The Royal Bank of Scotland. Prague. Know your customer 2017 EPH Mr. Horský holds a master’s degree in mathematics and (“KYC”) procedures physics from Masaryk University in Brno. Environmental policy 2020 EPH

Operational policy 2020 EPH

Procurement policy 2020 EPH

ESG Master policy 2020 EPH

Code of Conduct 2020 EPH

Table 26 EPH level policies. GOVERNANCE 180 PART 6 181 Case Study Policy Highlight: EPH Group Policies

Environmental Policy

The commitment of the EPH Group to strengthen its sustainability This Policy defines our commitments in regard to behaviour that has performance resulted in approval of Group policies by the EPH a direct or indirect impact on the environment. The Environmental Board of Directors in 2020. They were designed to bring all existing Policy describes basic principles we follow in terms of the climate principles and commitments together and present them in English and change and carbon footprint reduction, protection of biodiversity, in one place. These policies are applicable to all EPH subsidiaries and EMS, environmental impacts of the product portfolio, customer are currently being implemented on the local level. efficiency, regulatory compliance, renewable and clean energy promotion, resource and energy efficiency, waste management and end cycle management. ESG Master Policy

This document sets out a comprehensive policy framework and basic Operational Policy guidelines for the EPH Group as well as defining the core principles for sustainability related policies within the EPH Group and its specific This Policy defines our commitments in regard to the behaviour that policies described below act as add-ins to this Master policy. has a direct or indirect impact on the safety and efficiency. This Policy concerns the basic principles we follow in matters of the access to basic services, health and safety management, environmentally safe Code of Conduct operation of facilities, social impacts of our products, innovation and This document defines our standards of behaviour, managed as a modernisation, emergency management, stakeholder engagement practical value for our day-to-day business and making all employees and responsible marketing. personally responsible for the performance and reputation of the Group, ensuring a good relationship with all our stakeholders. These Procurement Policy commitments are already upheld by our subsidiaries on their own, in respective documents in their local languages. This policy is focused especially on the monitoring of our supply chain and encouraging that our suppliers, as well as our customers, are compliant with local regulations and with our internal policies related to human rights, employees, and environmental matters. GOVERNANCE 182 PART 6 183 Case Study Case Study EPH Compliance GDPR Challenge Committee

EPH has taken precautions Focuses on ensuring compliance with new We pay great attention to the protection of personal data to ensure compliance with data legislation, especially the General Data of our employees and business partners especially considering the Protection Regulation (“GDPR”) and the latest General Data Protection Regulation. We approached the EU’s protection regulation as well Market Abuse Regulation (MAR), reviewing GDPR challenge as an opportunity to review and further strengthen as regulation concerning energy the existing Group policies and identifying our processes connected to personal data protection. By keeping sector trading (“EMIR, REMIT, new areas that should be covered by those these data safe, the following risks are mitigated: policies (tax governance policy, discussing MAR & MIFID II”). how to advance whistleblower protection on a Group level etc.) and addressing Information risk In order to strengthen the Group’s current responsible approach in terms of compliance, in 2019 EPH established several issues of non-compliance reported Only necessary data for specific purposes should be stored and a new Compliance Committee. by the Group’s operational companies and made accessible for persons in charge. This lowers EPH strives to operate all its facilities safely and in compli- providing support regarding these incidents. the risk of information leakage. ance with licensing regulations at all times. Our compliance with such systems is ensured with regular on-site checks. In addition, we regularly undertake analyses and evaluations of environmental issues in order to assess their relevance for our companies. The main focus of our internal compliance Lower administrative burden management is to raise the level of awareness among our employees in order to prevent any possible breaches. The GDPR means a continuous process of effective data processing in a company.

Reputational risk

If data are adequately protected and information leakage risk is low, then the good name of a company in the area of data protection will be secured as well.

During the implementation phase, we provided assistance to our subsidiaries, to smoothen the process of becoming compliant with the GDPR. GOVERNANCE 184 PART 6 185 Case Study Whistleblower Policies at Subsidiaries: Best Practices

Eustream POZAGAS Standardised forms Company Ombudsman

The company uses established procedures regarding Employees may submit their complaints to Group Ombudsman, the complaints handling. There is an active e-mail address or who is obliged to investigate them. Complaints may be anonymous. a 24 / 7 hotline, which anyone suspecting unethical or anti-social This function is formally set up and employees are informed about behaviour may use. The procedure is subject to internal audit and it. Employees also have an opportunity to submit their suggestions there is a single person responsible for the collection, review and or proposals directly to the top management (followed by informing investigation. the Board of Directors) through boxes located in the office premises. To make the process even more efficient, the company introduced standardised forms, which is to be used by the employees who In case of complaint delivered directly to the Board Members or the suspect unethical behaviour. top management by an external party (i.e. outside of the company), the decision lies with them if there will be a special audit to investigate whether the accusation is substantiated. Whistleblower activity can be performed by employees either via a special 24 / 7 hotline or by email/letter to a specified address, which ensures SPP – distribúcia the anonymity of whistleblower. Involving external parties

The company encourages the use of the 24 / 7 hotline or any other whistleblower channels by external parties. Any supplier, customer or business partner having a suspicion about the behaviour of an NAFTA SPP - distribúcia employee is encouraged to raise a complaint. Anti-social conduct

The process for handling of complaints has been established through the Anti-social Conduct Policy. Employees may submit their complaints either via e-mail or use a 24 / 7 hotline. The procedure is subject to internal audit and there is a single person responsible for the collection, review and investigation. GOVERNANCE 186 PART 6 187 Case Study EPH Code of Conduct Procurement Practices

The EPH Group Code of Conduct contains Maintaining high standards throughout the supply chain, EPH Supply chain management Our business ethics works to promote sustainable growth, reduce inequalities and standards of behavior to be upheld by all enhance access to basic services. Procurement requirements EPH has a centralized procurement function managed by EPH This section defines the EPH Group’s commitments in its considering social and environmental aspects are affecting Group Procurement (“EPH Group Procurement”). The key role employees and is designed to ensure good standards of behaviour, managed as a practical value for its Group’s suppliers and can lead changes in their business of EPH Group Procurement is to develop and consistently day-to-day business and making all employees personally relationships with all stakeholders. Selected practices. Suppliers and business partners are expecting fair apply best practices in strategic procurement across individual responsible for the performance and reputation of the Group, and transparent treatment. subsidiary companies primarily with the aim of minimizing the key commitments are as follows: ensuring a good relationship with all its stakeholders. total cost of ownership of external purchases. EPH maintains consistently high standards in ethics through- EPH Group Procurement has a matrix responsibility over • Complying with all binding legal regulations; out its operations and supply chain and does not tolerate individual procurement departments within our subsidiaries, corruption or any sort of inappropriate behaviour at any level. whereby the centralised function focuses mainly on strategic • Conducting its marketing activities in a respon- Our subsidiary companies uphold these standards on their areas – large tender process and contract renewals negotia- sible and fair manner; own already. In fact, our subsidiaries already have their own tions. Where appropriate, EPH Group Procurement tenders Code of Conducts in place, in their local languages. selected categories for the entire Group (e.g. IT, office sup- • Ensuring security of sensitive customer data; plies, pipes, etc.).

• Guaranteeing equal opportunities and avoiding all EPH Group Procurement has a well-defined and compre- forms of discrimination towards existing or poten- hensive process through which it drives the EPH / subsidiary tial employees; cooperation during the end-to-end tendering process. This process contains a full set of guidelines and tools, which are • Creating healthy and safe working conditions for consistently applied across the Group. its employees; Thanks to the standardised and unified approach towards suppliers across EPH, EPH Group Procurement activities are • Guaranteeing freedom of association and right to transparent, fair and correct and EPH is viewed as a stable collective bargaining; and reliable partner for our suppliers.

• Continuous training and talent development; To make sure that the EPH Group upholds its commitment, thorough screening of any potential significant supplier is • Encouraging suppliers to not only comply with carried out, ensuring that the supplier complies with the existing laws and regulation but also adhere to stated principles and shares our commitments to law and regulation, ethical business conduct, human rights and working principles contained in the EPH Group policies; conditions, health and safety, and environmental protection.

• Minimizing environmental impact of its activities To further foster transparency, EPH Group Procurement has and maintaining appropriate environmental man- actively introduced an electronic auction process (“eAuction”) agement standards; across EPH and tripled coverage of tenders via eAuctions since 2014. • Promoting human rights through acknowledging the Ten Principles of the United Nations Global Compact.

EPH maintains consistently high standards in ethics throughout its supply chain and does not tolerate corruption, money laundering, non-compliance with international sanctions, anti-trust law or with any other relevant regulation at any level. GOVERNANCE 188 PART 6 189

Since 2018, we have been systematically looking into automation of P2P procurement process – it will lead to Risk and Crisis Management elimination of print-outs of procurement documents and need for transportation of these for approvals across sites.

Key tenders from across our subsidiaries are published on EPH Group Procurement is consistently focusing on the Strong mechanisms for evaluating risks and coordinating an The Risk Committee comprises of the following members the EPH web page (http://www.epholding.cz/en/suppliers/), demand management aspects of procurement activities, effective response helps to enhance the resilience of business and reports to the Board of Directors. This list sets forth the which led to increased supplier participation and transparency. engaging broader function across organization to drive activities, communities and create a base for sustainable members as at the end of December 2019: down costs. development. Effective risk and crisis management practices Total spend covered by EPH Group Procurement is a func- are expected by Group’s investors, as well as local communi- • Pavel Horský (Chairman) tion of the budgeting process within the organization which Finally, at EPH Group Procurement we also strive to promote ties and municipalities. is based on prudent demand management and evaluation environmentally friendly methods of communication using • Tomáš Miřacký of actual needs. In general, the spend value under the umbrella emails for document exchanges, preferring telephone con- of EPH Group Procurement is growing proportionately to versations over physical meetings including the use of video • Michal Buřil (Head of Group Risk) the overall growth of EPH. In 2019, the value exceeded EUR conferencing for supplier negotiations with face to face Risk management at EPH 2 billion of non-commodity spend. meetings limited to the final stages of negotiations. • Miroslav Haško In order to emphasise risk management within the EPH Group, particularly resulting from the acquisition growth and comple- Joint cooperation among EPH Group Procurement and EPH Since 2018, we have been using the eRFP process of ten- The Committee defines risk review activities regarding the tion of several recent major transactions, EPH has established companies’ procurement has brought significant monetary dering, where all documents sent out or received will be initiatives and risk exposures and discusses Group’s major a Risk Committee, which supervises all activities within the savings, however there are multiple other additional aspects published via eTool, thus reducing the consumption of paper risk exposures with the management and reviews the steps entire portfolio of EPH from a Group risk perspective. through which we believe EPH as well as its stakeholders are and improving process efficiency. management has taken to monitor and control such exposures. benefitting from: The EPH Risk Committee has been established to oversee We continue the focus on paperless and efficient procure- This risk assessment as well as the mitigation measures are the EPH Group-wide risk management practices to assist • Cross border cooperation and coordination among EPH ment processes. Since 2018, in key companies, we have subject to regular reviews and are continuously refined and the EPH board in: companies; been focusing on P2P procurement process automation, improved. especially via using work-flows and approval tools enabling Overseeing that the executive team has identified and • Supplier sharing leading to increased suppliers tender acceptance and approvals throughout the process via internal We understand it is our obligation to provide information to assessed all the risks that the organization faces and has participation; IT systems. We will focus especially on eOrdering as well to local communities regarding the safety risks of our power established a risk management infrastructure capable eliminate printing and signing purchase orders. That will also plants and industrial sites, emergency plans, gas safety of addressing those risks • Standardised approaches and methodologies across have a significant impact on further reduction of sources – it of network operations and electrical safety. These topics are EPH for increased transparency; will eliminate print outs of procurement documents and need described in detail in the environmental chapter. Overseeing, in conjunction with the EPH board (and if appli- for transportation of these for approvals across sites. cable with other board-level committees), risks such as • Know-how and the best practice sharing for people credit, market, liquidity, operational, reputational and other development; risks, if relevant • Group synergies in selected categories. In conjunction with the full board, approving the EPH Group’s enterprise wide risk management framework.

EPH takes risks associated with its operations very seriously. Apart from our activities in reducing environmental impacts and subsequent risks, we analyse and mitigate financial, operational and strategic risks as well. GOVERNANCE 190 PART 6 191

EPH Risk Committee helps to develop a culture of the enterprise risk, integrate risk management into the organisation’s goals and create a corporate culture such that people at all levels manage risks rather than reflexively avoid or heedlessly take them.

Operational risks

Operational risk is the risk of loss arising from fraud, unau- Certain businesses of the Group (including the Generation & thorised activities, error, omission, inefficiency or system Mining Business, Heat Infra Business, the Gas and Power failure. It arises from all activities and is faced by all business Distribution Business and the Gas Transmission Business) organisations. Operational risk also includes legal risk. are also sensitive to variations in weather.

In addition, the demand for EPH Group production may be Financial risk Liquidity risk Cyber risk and system risk adversely affected by unexpected technology failures in Information related to the Group’s exposure to financial The Group’s management focuses on methods used by Cyber security protects systems, networks, data and programs customers’ facilities. Due to the technologies used in the and operational risks and the way it manages such risks is financial institutions, i.e. diversification of sources of funds. from digital attacks. Cyber threats are constantly evolving, facilities of some of our customers, the occurrence of such included in the EPH 2019 Consolidated Annual Report. The This diversification makes the Group flexible and limits its so an adaptive approach to cyber security is adopted in the unplanned outages is not uncommon. Planned outages can most important types of financial risks to which the Group is dependency on one financing source. Various methods EPH Group with regular reviews of risks and selection of also lead to the detection of unexpected issues, which can exposed are credit risk, liquidity risk, interest rate risk, com- of managing liquidity risk are used by individual companies corresponding measures for the most effective protection. lead to long-term shutdowns until these issues are resolved. modity price risk, foreign exchange risk and concentration risk. in the Group. The risk-based approach means that the adopted cyber To minimise this exposure, the Group enters into derivatives security measures are based on each company’s unique risk Regulatory risk contracts to mitigate or manage the risks associated with profile to meet the exact demands of its concrete business Commodity risk individual transactions and overall exposures, using instru- environment with reasonable threat assessment. The EPH Group’s business may be adversely affected by ments available on the market. The Group’s primary exposure to commodity price risks arises changes in regulated tariffs or the introduction of new obliga- from the nature of its physical assets, namely power plants. EPH Group’s companies follow requirements of many informa- tions to pay regulated tariffs. In case of favourable power prices, the Group manages tion security standards and frameworks, as well as laws, e.g. Credit risk the natural commodity risk connected with its electricity the GDPR or EU NIS Regulations (Network and Information The Group is exposed to risks resulting from the state The Group has established a credit policy under which each generation by selling the power it expects to produce in the Systems Regulations 2018). Companies with power grid, heat regulation of electricity selling prices by the states in new customer requesting products/services over a certain cogeneration power plants and in ancillary services on an distribution, the transport network and information and which it undertakes business activities. A substantial part limit (which is based on the size and nature of the particular up to two-year forward basis. In case of low power prices, communication systems are part of the so-called “critical of the sales of the Group’s Gas Transmission Business, business) is analysed individually for creditworthiness before instead of entering into such forward contracts, the Group infrastructure”, for which it is essential to maintain vital func- Gas and Power Distribution Business, Heat Infra Business, the Group’s standard payment and delivery terms and condi- uses the flexibility of its own power generating capacities to tions, for the society. Their cyber security is managed in EPH Generation & Mining Business and Renewable Energy tions are offered. The Group uses internal credit models as well react to current power prices with the aim to achieve better according to relevant specific legislation and regulation to Business are derived from activities which are subject to as external credit databases for analysis of creditworthiness average selling price. prevent damage or destruction by natural disasters, terror- regulated tariffs. of new customers, who are also subject to Risk Committee ism and criminal activity that may have negative nationwide approval. The exposure to credit risk is monitored on an consequences. Apart from the regulated tariffs, risks also arise from the ongoing basis. changes in the European energy legislation affecting the scope Physical incident risk and the market price of the European Emission Allowance, European miming legislation and European renewable energy Failures, breakdowns, unplanned outages, as well as natural support schemes. disasters, sabotage, or terrorism or public opposition may cause delays or interruptions in the Group’s operations, Climate change related risks Financial risks Operational risks Strategic risks increase capital expenditures, harm the Group’s business and reputation or cause significant harm to the environment. We are closely monitoring the development of the climate Credit risk Cyber risk and system risk Socio-economic and political risk change and subsequent climate deals and their possible Liquidity risk Physical incident risk Joint ventures participation risks The Group’s transmission infrastructure, gas, power and heat impacts on our business segments. EPH’s approach to climate distribution infrastructure, heat and power plants, gas stor- change and its mitigation is further described in the chapter Commodity risk Regulatory risk Concentration risk age infrastructure, energy trading platforms, wind and solar Environment, in the section of: GHG emissions: Our business farms, biogas facilities, transport network and information and climate change. Climate change related risks Competition risk systems controlling these facilities, could be subject to failure, Employment related risks breakdowns, unplanned outages, capacity limitations, system loss, breaches of security or physical damage due to natural Reputational risk disasters, human error, hacker attacks, fuel interruptions, criminal acts or unscheduled technological breakdowns at Table 27 Risk groups managed at EPH. customers’ facilities. GOVERNANCE 192 PART 6 193

EPH Group’s senior management analyses possible risk through various lenses trying to assess possible development scenarios, preparing contingency strategies and plans.

Strategic risks Investigations, litigations and sanctions Socio-economic and political risk Concentration risk EPH monitors its relations with the workforce. If the rela- To our knowledge, all companies are fully compliant with The EPH Group’s business is exposed to political, economic Major part of gas transmission, gas and power distribution tions would deteriorate for any reason, including as a result the current legislation and regulation in their respective and social developments namely in the Slovak Republic, and gas storage revenues, which are primarily recognized of changes in its compensation or any other changes in the countries of operation. Currently, there are no open critical the Czech Republic, Germany, France, the UK, the Republic by SPPI Group and Stredoslovenská distribučná, are con- Group’s policies or procedures that are perceived negatively by cases of investigation, litigation or sanctions. For detailed of Ireland, Italy and Hungary. centrated to a small number of customers. This is caused employees, or if the Group is unable to successfully conclude information, please refer to our EPH Annual report 2019. by the nature of business which has high barriers of entry. any collective bargaining agreements with the trade unions, The Group’s business activities are largely concentrated in At the same time, majority of these revenues is subject to the Group may experience a labour disturbance. This could In 2019 there were no incidents or fines at any of the busi- the so-called "Emerging markets", which carry higher risks regulation as well as recognized under long-term contracts, take form of work stoppage at the relevant facility or facili- nesses of EPH resulting in significant impacts related to the compared to more developed markets. Especially with regard often under ’take or pay’ schemes which limit the volatility ties, which could have a material adverse effect on any such environmental or social aspects. Compliance with all licensing to deterioration of the credit rating of individual countries, of revenues year-on-year. From the credit risk perspectives, facility’s operations and on the Group’s business, financial regulations was consistently ensured across our operations. which affects the financing costs of EPH Group companies the counterparties are typically high-profile entities which condition, results of operations, cash flows and prospects. A minor environmental fine was imposed on BERT, one that are active in these countries. are dependent on the supplied service which naturally limits of EPIF’s subsidiaries (EUR 142). the present credit risk. Some subsidiaries of the EPH Group guarantee their cur- The EPH Group also operates in the United Kingdom and rent and former employees pension benefits on the basis Northern Ireland market, and is therefore exposed to the risk of a certain pension system frameworks, which are in some Competition risk of Brexit, ie. the United Kingdom’s withdrawal from the EU. At cases managed by trustees, outside of the Group which has Lobbying and political present, the form of the final agreement between the United Many of the markets in which the Group’s business lines therefore limited control over the assets. engagement Kingdom and the EU on further joint operation is unknown, operate, are increasingly competitive and as such, the Group therefore, the impact of Brexit on the EPH Group cannot yet is exposed to the risk of not being able to compete effectively We require our funding to be managed in a transparent way, Reputational risk management be assessed. on an ongoing basis. For example, in the Group’s Heat Infra ensuring that it does not support any illegal and unethical Business there are pricing pressures from alternative sources At EPH, we manage our reputation and brand image by action or organisation, in keeping with our sustainability The Group’s business could be adversely affected by the of power. conveying our values and communicating our approach to commitments. EPH is a responsible investor, as our Group continuing crisis in Ukraine and the political and economic sustainable development, business ethics and our role within neither supports political parties nor contributes to the uncertainty it creates. Heightened levels of tension between In addition, the energy supply market is very competitive society and the environment. funds of groups whose activities are deemed to promote Russia and Ukraine, military activity on the border between with many businesses operating on the markets in which the party interests. We participate proactively and responsibly in Russia and Ukraine, the accession of Crimea to Russia and Group operates. The Group’s primary competitors in the Czech One of our priorities is to present truthful information about discussions with governments and other organisations about the imposition by the U.S., the EU and other countries of vari- energy supply market are RWE, E.ON and ČEZ, and in the EPH and to make sure that the publicly released claims by the development of proposed legislation and other regulations ous sanctions and certain other measures against specified Slovak energy supply market are SPP, ZSE Energia, Innogy another party are true as well. By constantly monitoring which may affect our business interests. Ukrainian and Russian individuals and certain Russian entities Slovensko and ČEZ Slovensko. The Group’s customers may public media, we are able to warn our stakeholders about any could have a direct impact on the Group in the future. The leave in order to obtain their energy from other suppliers. In occurrence of false information release related to EPH. Our Fine category 2018 2019 interruption of gas flows from Ukraine could also negatively order to compete with other energy suppliers, the Group may approach is to uphold standards of reliable communication, impact the performance of eustream as a portion of its have to reduce prices further. as we prepare our business, financial and accounting records 464 142 revenues is dependent on the commercial gas flows in the accurately and transparently. Environmental Fines eustream network. Employment related risks In regard to communication with our business partners, we Society 0 0 The Group’s ability to maintain its competitive position and provide all relevant information in a truthful, clear and fair Joint ventures participation risk to implement its business strategy is largely dependent on manner. As for communication with our customers, we at Governance 0 0 In cases of minority participations the EPH Group is dependent its ability to retain key managers and senior executives as EPH promote a responsible marketing approach, providing all on the approval of certain matters by the joint venture part- well as skilled personnel and to attract and retain additional information regarding our services or possible risks, emergen- ners or those authorized with operating these ventures. The qualified personnel who have experience in the Group’s cies or health issues objectively and truthfully. Total 464 142 consent of the partners may also be necessary for the EPH industries and in operating a group of the Group’s size and Group to obtain the disbursement of funds from projects or complexity. There may be a limited number of persons with Table 28 List of significant fines during the 2019 (EUR). entities, or to transfer its participation in projects or entities. the requisite experience and skills to serve in the Group’s Additionally, some parts of joint ventures are held by a public senior management positions, and the Group may not be entity, such as the Slovak Republic, or by other entities with able to locate or employ or retain qualified executives on interests that differ from the interests of the EPH Group. acceptable terms, or at all.

Primary aim of the senior management is to correctly and objectively assess possible risks and opportunities in all our business areas. Social

The main strengths of the EPH Group include good relationships with employees and their loyalty. The Group maintains good and fair relations with the trade and labour unions within the Group companies through regular meetings and discussions on labour, social and wage related issues. Similarly, respecting the human rights and implementing non-discriminatory guidelines are viewed as essential for securing an employee-friendly working environment across the EPH Group. Safety and quality management covers health protection at work, safety management systems, technology and human resources. We play an active role in supporting and developing our local communities through social initiatives. SOCIAL 196 PART 7 197

Material Topics Health & Safety

1 Commitment from the top management

Health & Safety Employment and employee Customer relationship management Development Health and safety are often at the core of both internal and Top management is actively involved in H&S issues and they development of the communities external stakeholders’ concerns. Understanding the critical are carefully considered in each decision-making process. importance of ensuring good wellbeing of our employees, H&S reporting is established and taken very seriously. For we strive to put in place safety mechanisms of the highest example, within SSE, weekly updates on H&S indicators are standards and promote a culture of “putting health and safety discussed at management meetings, while semi-annual and first“, throughout our supply chain. With these steps, our work annual reports on H&S are presented directly to the Board feeds into global efforts in promoting health and wellbeing of Directors. This issue holds the same importance in other Relation to our customers and EPH’s Community involvement and selected Health and safety management at EPH Our employees for all at all ages. companies of the Group. approach social initiatives

Training and development Health and Safety 2 H&S is integrated into Table 29 Material topics in the social section. management at EPH our remuneration system

The EPH Group is committed to ensuring the highest stan- The integration of H&S results in the incentive scheme dem- dards in regard to the health and safety management of its onstrates the commitment of the each company to address employees, contractors, customers and all stakeholders. these issues and link them to the assessment of employee The EPH Group is committed to maintaining its certification performance. standards on par with international levels and keeping the existing norms relevant to each subsidiary. The employees are obliged to adhere to all of the safety policies, with the EPH Group ensuring that all of its employees are informed 3 Preventive approach of applicable laws and regulations and have completed A reduction in accidents is an important goal, however, relevant training in the area of health and safety at work. being able to continuously achieve better results over time The EPH Group is committed to conducting business activities represents one of the most challenging issues in H&S. In Introduction in a transparent and operationally excellent manner, ensuring We take the health and safety of our employees, contractors order to achieve and maintain decreasing accident trends for a good relationship with all its stakeholders. This chapter and other stakeholders very seriously in our operations. both our employees and contractors, various EPH companies of the report aims to provide further details on identified Moreover, we are constantly striving to improve the safety focus on a preventive approach based on a detailed analysis material topics: Health & safety, Employment and employee level of the Group’s activities by introducing measures focused of accidents, “near-misses” and remedial actions, with the aim development, Customer relationship management and on risk assessment, elimination, mitigation and prevention. of ensuring that similar accidents will not occur in the future. Development of the communities.

Monitoring and analyses of near-misses and incidents is another important part of this preventive approach, as a reduc- tion of near-misses can help lead to the prevention of severe and even fatal accidents.

4 Control and risk reduction

H&S management requires a precise risk assessment, as well as regular inspections on site. For instance, BERT performs such a work-related risk assessment for every type of work including not only activities performed by its own employees Our management denominates eight but also those of its contractors and subcontractors. It also runs enhanced controls for work with increased risks. Each pillars in line with OHSAS 18001 work supervisor is required to pass an examination on BERT’s safety rules. principles which are about strategy, At the workplaces of SPP-D, external entities perform sys- goals, decreasing injuries and necessary tematic safety inspections that provide an important input for the assessment of projects and technological processes changes to improve existing conditions. in terms of H&S. SOCIAL 198 PART 7 199

67% of EPH’s employees work in companies that were certificated 40 under OHSAS 18001/ISO 45001.

5 Focus on behaviour 7 Emergency management and fire protection According to studies, 80–90% of accidents are caused by 2016 2017 2018 2019 human error (Heinrich et al, 1980). At the same time, trans- Our companies work on enhancing procedures for fire pro- Our commitment to the health and safety of our employees formation of behaviour from unsafe to safe is one of the most tection and preparation for emergency situations, they have Employees hours worked & Incidents can be proven by the fact that over 7 thousand employees

difficult challenges a company can meet on the way towards dedicated plans and perform regular drills and training. mil. hours Hours worked 16.1 16.7 16.8 18.1 (67%) out of more than 11 thousand employees work under achieving a goal of “zero harm”. Behaviour Based Safety the OHSAS 18001/ISO 45001 standard. (“BBS”) is a reinforcement action taken by an organisation’s As an example, at eustream, regular emergency drills are # Registered injuries 46 64 65 63 management to identify the immediate and root causes controlled by HSEQ department in collaboration with the However, this does not mean that rest of our employees do # Fatal injuries 0 1 0 0 of unsafe behaviour and then apply corrective measures to dispatch department and fire safety brigades. not work in a safe and healthy environment. All EPH Group reduce unsafe actions by employees. index Injury Frequency Rate* 2.9 3.8 3.9 3.5 companies are compliant with the legislative requirements in the H&S area, in their respective countries. We are taking BBS puts employees at the centre, trying to understand even more steps in managing H&S at our plants and we view the reasons of unsafe behaviour and defining the ways of 8 Health protection this area as extremely important. Contractors hours worked & Incidents improvement. The health of our employees is treated as seriously as their mil. hours Hours worked** 0.0 0.0 2.5 2.4 safety. Various initiatives aimed at the promotion of health Observations are a key tool, when the worker observes and and well-being in the workplace are in place in our companies. feels responsible not only for his or her behaviour but also # Registered injuries 6 16 18 10 For example, SPP-D regularly performs medical examinations for the behaviour of their colleague. BBS is an important for their employees. # Fatal injuries 0 0 0 1 step in the transformation of safety culture from reactive and dependent to proactive and interdependent. index Injury Frequency Rate* 0.0 0.0 0.0 0.0 While the H&S results demonstrated by EPH and our subsidiar- ies are improving, the ultimate goal is to have all operations Table 30 Employees and contractors hours worked and incidents. and sites capable of maintaining a sustainable “zero harm” Note: * number of registered injuries per million hours worked. 6 Training and communication objective. In order to meet this goal, EPH will continue to sup- ** The total number of hours worked by contractors has not been reported by all companies in the port our subsidiaries in reinforcing preventive tools, in keeping Group this year and therefore, the final figures may not be completely representative. We are working H&S training as well as communication are recognised as attention on contractor management, elimination of unsafe on changes in our reporting process, to be fully compliant in the next reporting period. important channels for the diffusion of H&S knowledge, behaviours, share best practices and lessons learned and awareness and culture among our employees and contractors. continue to promote safety leadership at all organizational Training is not a one-off moment. We facilitate periodical levels to drop number of accident to the minimum. retraining. We take pride in treating the health of our employees and The EPH Group also provides general training programmes contractors as a top priority. Regrettably, in 2019, 1 fatal on employee safety and when selecting or assessing potential incident occurred at SSE involving a contractor due to electri- suppliers the Group also takes into account their approach cal shock when performing maintenance works on the power and attitude towards safety issues. line. The investigation was terminated without any mistake on SSE side. In addition, for instance at BERT, EPIF’s subsidiary, we are raising awareness regarding the safest approach to work through the discussion of current H&S risks on daily and weekly O&M meetings.

BBS puts employees at the centre, trying to understand the reasons for unsafe behaviour and defining ways of improvement. 40 Certification of management system of safety and health protection Graph 21 Employees covered by OHSAS 18001/ ISO 45001. at work. SOCIAL 200 PART 7 201 Case Study We Were Awarded: Employment and Employee Development Safe Enterprise Program

Pražská teplárenská firstly enrolled in the Safe Enterprise program in Decent work conditions are intrinsic for the development We are an employer that offers equal and fair treatment for all of human capabilities, increase in productivity and sustainable of its employees, respecting their race, nationality, ethnicity, 2002, followed by Plzeňská teplárenská in 2003. The Safe Enterprise growth. In our HR processes, we stress access to education as age, gender, sexual orientation, religious beliefs, political views program, guaranteed by the State Labor Inspection Office, aims a critical aspect of our functioning. Striving to set standards or disabilities. The EPH Group acts in line with the relevant of best practices in our field, we place access to decent work labour codes, applicable legal regulations and internal policies, to increase the level of Occupational Safety and Health (“OSH”), and continuous education to the core of our mission. ensuring recruitment, promotion and treatment on the sole environmental protection, work culture and well-being. basis of the employees’ qualifications, abilities, experience, and work performance, avoiding all forms of discrimination. Our employees In addition, the Group respects its employees’ right to partici- The scheme complies not only with the Czech regulation but also with pate in the trade union of their choice and does not tolerate any type of retaliation or hostile action towards people who We are convinced that effective and meaningful management regulation applicable in the EU member states. With this programme, participate in union activities. of our employees is a prerequisite for successful operations our employees gradually acquired the understanding that occupational across our different businesses. EPH Group encourages the Regarding the working conditions of our employees, we are particular local approach at subsidiary level, while maintaining health is not only about protective tools but rather about responsibility committed to creating and maintaining healthy and safe corporate standards that ensure the respect for our Group’s working conditions beyond the applicable regulation, with the and respect in a more generic sense. business principles and responsible behaviour. This is even most appropriate health and safety management system to more the case in today’s challenging energy market environ- mitigate potential risks arising from technological processes, ment, where attractiveness for experienced employees with technical equipment, human activity and working environment. For its efforts in occupational health and safety, Pražská Teplárenská a particular know-how is becoming a competitive advantage for any utility-type company. was awarded the highest degree of award in the field. By fulfilling The EPH Group keeps its employees informed on how their contribution at work is evaluated, expecting them to actively the Safe Enterprise program, we defended our position among the We are aware of the ever growing competition for top talent take part in the evaluation process so they can keep improving across the markets where we operate and therefore at EPH eighty-one companies in the Czech Republic that received this their performance. We aim to ensure appropriate education to and within our subsidiaries, we place great importance on increase awareness among our employees regarding health award. The field of energy features these companies: PRE, PRE creating and maintaining an attractive working environment and safety at work, which also involves business partners and where all our employees can develop and grow in the most distribuce, Teplárna ČB, ČEZ tepelné a vodní elektrárny, Energotrans, visitors to a reasonable extent. The EPH Group pays attention appropriate roles across the organization. JE Dukovany, JE Temelín, ČEZ Distribuce, Elektrárna Chvaletice, to the professional growth of its employees. Within the holding structure of EPH, the human resource ČEZ Měření, Teplárny Brno, ČEZ Distribuční služby. In 2019, across our operations and geographies, EPH employed functions are decentralized and the responsibility for them 11,453 (10,711 in 2018) professionals. From the total FTEs, lies within each subsidiary. This allows for much greater 9,386 were male employees and 2,067 were female. The flexibility in responding to the needs of our employees and it The certificate received in 2018 is valid for three years and both percentage of women in energy industry is in line with the is effectively a necessity in order to account for the inherent sector standards. 93% of employees had permanent contract companies will aim to retain the award in 2021. differences between our various operations, whether due to and 89% of EPH employees are covered by various collective location, business area, size of the company’s workforce, employment agreement schemes. unionization, or other reasons.

From its position of the main shareholder, EPH strives to promote the trust, ownership, engagement and commitment of our employees as this has a direct impact on driving innovation, employee morale, productivity, retention and talent attraction. SOCIAL 202 PART 7 203

Slovakia Germany Czech Republic Italy France UK Hungary Poland Others Headcount 4,214 2,728 2,529 582 518 506 208 153 17 Total number of employees

Graph 22 Employees by country in 2019.

We are proud employers of 288 employees Majority of our employees are between 30 and 50 years, followed by employees over 50. Nevertheless, we strive to with various disabilities. We strive to provide achieve a healthy mix of various generations to enhance diversity, continuous learning and effective cooperation. them with the best available conditions To attract young talents we designed various talent and educational programs as described in section „Training and to engage in daily activities. Development“. In addition to that, we work towards inclusion of minority groups. Graph 24 Total number of male and female employees.

Age distribution of employees in percentages Employees in management

Graph 23 Age distribution of EPH employees. Graph 25 Total number of male and female executives in the top and middle management. SOCIAL 204 PART 7 205

Training and development 2016 2017 2018 2019 As in any energy related field, the business area suffers from At EPH, we recognise and appreciate the need of our employ- EPH and its subsidiaries place great importance on the devel- New hires an acute shortage of women. These rates are thus comparable ees to coordinate in regard to the negotiations with their opment of our employees as we recognise that our employees 41 Number of new hires – Male 526 739 885 772 to our peers in the energy business, being around 20% for employer. As we are fully compliant with the European and are our top asset and we are committed to their personal women in standard positions and around 15% for women in the national regulations, we allow freedom of association within development. As mentioned in the previous subsection on Number of new hires – Female 229 197 224 225 top and middle management positions, although we are aware all our companies. Employment, given that EPH uses a decentralised approach of the decrease of women’s share on the higher management in human resources, this section draws on the experience, Number of new hires – Total 755 936 1,109 1,027 level. The EPH Group respects and upholds all principles Across all eleven countries in which EPH operates, we provide processes and activities of some of our major subsidiaries, all embedded in the ILO Declaration on Fundamental Principles permanent contracts to 10,598 employees. Understanding of which highlight the importance each of these companies and Rights at Work, including elimination of discrimination. protection of human and political rights as a must, we make place on our most precious asset – our people. Leavers The recruitment process, promotion and treatment is based sure that our employees have free access to mechanisms solely on the employees’ qualifications, experience and work of collective bargaining. Around 89% of EPH’s employees Number of leavers – Male 988 799 1077 823 2016 2017 2018 2019 performance. Even though there is no preferential treatment are covered by various collective bargaining schemes. Number of leavers – Female 232 205 222 265 towards male candidates for any position, high portion of posi- Training tions in the energy related fields is typically occupied by men. Number of leavers – Total 1,220 1,004 1,298 1,088 These ratios subsequently affect female representation at the Total training hours – all employees 235,729 239,037 258,564 284,946 top and middle management positions as well. Table 31 Employee turnover overview. Total training hours – per employee 22.9 23.3 24.0 24.9 In total, there were 678 employees in the top and middle

management in 2019 across the Group while the ratio of Table 32 Training hours. employees vs. executives remains relatively stable with approximately 1 executive on 16 employees. Almost 89% of our employees are covered by various collective In 2019, more than 284,946 hours were bargaining agreements. dedicated and committed to training and development of the employees within the EPH Group, supporting lifelong learning in alignment with SDG 4, Quality education.

Graph 26 Collective bargaining. 41 Based on the analysis of 5 main comparable energy groups in Europe. SOCIAL 206 PART 7 207 Case Study MIBRAG: Customer Relationship Management “Colleagues Train Colleagues” Project

MIBRAG employees have complex knowledge and experience. The We serve our customers by providing them with affordable, reliable and modern access to energy. Working to ensure Relation to our customers project “Colleagues train colleagues” intends to help to make more sustainability of our services, we act as one of the most and EPH’s approach use of this knowledge within the scope of training classes offered active companies in the region in speeding up the transition towards renewable energies. Through our services, we strive to EPH is a vertically integrated energy Group covering the internally within the company. contribute towards sustainable and inclusive economic growth. complete value chain in the energy sector, including more than 50 companies operating in coal extraction, electricity and heat production from conventional and renewable sources, Potential MIBRAG trainers sat down together during a kickoff electricity and heat distribution, electricity and gas trade and workshop in March 2019 to discuss opportunities and contents their supply to final customers and logistics. In addition, EPH is an important regional player in various segments of the of training classes in the company. gas industry, including gas transmission, gas distribution and gas storage.

Since 2019, internal training classes have been offered in the fields of As one of our crucial responsibilities, we strive to provide labor and mining law, controlling and presentation techniques. Further high quality and reliable electricity, gas and heat supply which is affordable for our customers. Energy is essential for classes – e.g. on compliance, energy management and occupational a country’s economic and social development, as well as for safety – will follow in 2020. On fixed dates, the trainers meet regularly facilitating and enriching people’s daily lives in the modern world. Consequently, providing access to basic services, such to exchange experience and talk about teaching success. as electricity, gas or heat, and other commodities across all the communities where we operate is a primary goal of the Group, through the use of new technologies and the development This project does not only contribute to sustainable cost optimization, of specific projects to create shared values. but also to the competency enhancement. Employees who become Our electricity, gas and heat business, as well as the coal internal trainers can develop their strengths and deepen their extraction, is regulated by the states, which means we always knowledge. On the other hand, employees who attend the classes can offer reasonable prices to our customers. In addition, for instance in Slovakia, due to regulation, we offer better prices benefit from contents tailor-made to MIBRAG’s needs for hands-on to vulnerable and disadvantaged customers. implementation.

The “colleagues train colleagues” concept will become a permanent and sustainable component of the MIBRAG’s employee education program.

As one of the leading distributors and suppliers of electricity, gas and heat, the EPH Group is responsible for ensuring reliable, quality and environmentally safe deliveries to our customers. SOCIAL 208 PART 7 209 Case Study Plzeňská teplárenská: Energy Consumption Monitoring at Kindergartens

With regard to the operation of our facilities, we frequently These efforts are primarily concentrated in SSE, where we The main goal of this project is to extend the portfolio of services update the information on safety risks associated with our offer our customers services aimed at energy savings, such services and products. Our companies have hotlines in as LED lightning, highly efficient heating, heat pumps or we we offer to our customers. Monitoring includes all energy, which the place where customers can call in a case of an emergency. install solar panels. Also, for example at Pražská teplárenská, customer consumes, and alerts to failures or energy accidents. This In addition, the websites of the EPH Group subsidiaries are Plzeňská teplárenská or Elektrárny Opatovice, we inform frequently updated with any information regarding accidents our customers about optimal temperature, efficiency and its service allows customers to optimise their energy consumption and or planned outages. In case of any emergency, the EPH Group relation to energy savings. In Gazel, we share tips and tricks reduce energy costs. The expected benefit lies in the assumption communicates quickly and transparently with all involved related to energy efficiency as well. We aim to educate our stakeholders and governmental bodies. Our emergency industry customers in long-term energy saving strategies and that the customer will not attempt to change the energy supplier, plans are designed to include the best practices in safety the public in daily habbits that lead to a positive change. We if, for example, heat and hot water are supplied to the customer management. focus on the optimal use of lighting, heating, office equipment, machines and the relevance of insulation. and monitoring of other commodities, such as energy and gas, is For distribution of electricity, the key indicators measuring provided at the same time. This took place in several buildings in the network reliability (“SAIDI, SAIFI”) have been well below the Through our activities in the EPH Foundation, or even at requirement of the regulator in 2012-2019. In the gas distribu- subsidiary levels, we are also raising the awareness among Pilsen region. Since January 2020, the monitoring devices of energy tion segment, there are predictive maintenance processes customers, children and the general public about energy consumption have been installed in some kindergartens in the city in place to identify spots in the network where maintenance savings and responsible behaviour with respect to energy. works should be preferentially performed. At the EPH Foundation, we fund educational campaigns of Pilsen. primarily for children, showing them the importance of nature In the area of customer communication, it is important to protection and a variety of environmental topics. note that most of the EPH Group companies have an Ethics Manuals or Codes of Conduct42 that contain the rules for employees in regard to the ethical and transparent conduct towards customers. As we place high importance on provid- ing the best service possible, we have clear and accessible communications channels in place for our customers.

Our customer services are not limited exclusively to the supply or distribution of the aforementioned commodities. We under- stand that energy savings and providing sustainable products are highly important in the process of decarbonization. 42 For greater detail, see the Governance section of the report.

Subsidiary companies of the EPH Group that have direct contact with the end consumers, also offer eco-efficiency services and products to help them save electricity, heat or even generate their own electricity. SOCIAL 210 PART 7 211 Case Study SSE Holding: Development of Communities Educating our Customers on Energy Efficiency

With the redesign of its website in 2016, SSE, a member company EPH recognizes the opportunity to partner with communities as an opportunity for mutual growth. Through EPH Foundation, Community involvement of the EPH Group, launched an online programme: Advice and tips we act as proactive players in promoting number of initiatives and selected social initiatives for household savings, providing our customers with easy-to-gather ranging from university education up to supporting local municipalities with the common goal of promoting justice It is important for EPH, as a key stakeholder, to support and advice on energy-saving practices. Our primary motivation was to and building accountable and inclusive institutions. develop the area we operate in. We believe that children offer our customers an understandable advice on energy savings, are our future and that it is crucial to dedicate special effort and resources to their education, in our case, in the area which is currently crucial for Slovak households due to rising prices of energy efficiency. of goods and services. We are actively reaching out to our current and potential customers through targeted media communication by using the influence of Facebook and Youtube social media. Due to the consumers’ interest in the topic of household savings, we have been able to increase the number of visitors of website www.sse.sk/rady in the long term.

The yearly increase of 55% in traffic in the website section focused on sustainable household practices indicates that the programme has been successful in its pursuit of raising awareness about energy efficiency. In 2020, we plan to add more useful tips to this subpage, and we are determined to continue to educate Slovak households on their way to energy efficiency. SOCIAL 212 PART 7 213 Case Study Case Study SSE Holding: SSE Holding: Educating Children and Communities Engaging with our Communities in Slovakia

Further expanding our work in education on energy efficiency to The cooperation between SSE and Zázrivá Station, In 2019, the SSE Holding group organised several chari- younger generations, our students’ competition on energy efficiency a rescue centre for injured animals, has a long history table collections for St. Elisabeth Caritas in Zvolen, and and exceeds the traditional donor-recipient relationship also within the SSE Holding Christmas market it collected reaches 100 schools annually increasing interest of thousands of restricted to financial assistance. EPH’s professionals EUR 6,000 for the Angel Wings Foundation, which helps students in sustainable practices. In 2019 we launched an educational regularly come to support technical works which help the sick, disabled and people in difficult life situations. project for children in kindergardens and elementary schools where an to prevent deaths and serious injuries of birds on power distribution grids. interactive friend “Šťukes” teaches them energy-saving practices. Finally, following up on a series of charitable collections, we made a strategic decision to streamline our efforts Hoping to help schools in their educational activities, we prepared Equally important among our community relationships and established a strong partnership with a civic asso- is the 8-year-long partnership with the Calvary Fund, an ciation the Light of Hope. This partnership gives us the entertaining teaching materials which include brochures with organisation dedicated to the restoration of a complex opportunity to contribute on a regular basis and in the various tasks, five educational videos and a series of educational of buildings in Calvary which is commonly listed among long term to effective assistance for children suffering games. Within this activity, the children were educated in efficient most significant sacral monuments in Slovakia. We joined from cancer and their families. lighting, heating, cooking, showering and working with electrical efforts with Calvary to set up an electrical illumination of the complex and save the UNESCO monument from appliances under the guidance of their teachers. The popularity of deterioration. As a result, the number of visitors more the competition is confirmed by 4,700 visits on web page www.sse. than tripled reaching over 90,000 in 2019. sk/stukes, while the year-on-year increase in the traffic reaches 28%. With over 2,400 views, videos on the SSE YouTube channel are also showing a growing trend. Complemented by a series of Youtube videos, our educational programmes have established themselves as one of the most influential educational activities in the field of energy in Slovakia. United Energy: Making a Home for a Falcon Family

After installation of a special booth on its chimney in 2014, the power station Komořany has become a home We also take our part in preserving for a couple of falcons. In the past six years, the protected the natural and cultural heritage predators managed to enlarge their family by eighteen young birds, who were all born on the Komořany chimney. for the future generations of the As recorded by ornithologists monitoring this falcon family, the three youngest members were born in 2019. countries we operate in. SOCIAL 214 215

EPH Foundation and donations from our subsidiaries

The EPH Foundation was established at the end of 2014 and In 2019, the EPH Foundation participated in a total of 775 proj- is a main facilitator of all our activities that are related to ects, through which EUR 1,659,049 in total was contributed. grants, charity and supporting social initiatives or community Altogether, EUR 842 thousand was distributed among grant development programmes. EPIF Group is the founder and programs described in the following chart. Additionally, the primary benefactor of the EPH Foundation. EPH Foundation creates partnerships with organizations whose goals and outputs contribute to the Foundation’s objectives. In total, EUR 816 thousand was provided to The foundation was established mainly to support: partnership programs this year. • development and protection of spiritual values, realization and protection of human rights or other humanitarian Besides the partnering projects with other organizations goals; of similar focus, the highest amount spent, EUR 169 thousand, was again in the program „Municipality“, established for further • protection of the environment; development and protection of cultural values. A program with the second-highest amount spent was „Foothold“, aimed at • preservation of natural values; organizations and social services supporting disadvantaged individuals, such as non-state children’s homes, NGOs, civic • promotion and protection of people’s health; associations, etc. The amount distributed by the Foundation on this project was EUR 150 thousand. • protection of children and youth and their rights;

• development of education, humanitarian aid for an indi- vidual or a group of persons in a life-threatening situations or in need of urgent assistance in the event of natural disasters.

In total, during 2019 the EPH Foundation participated in and funded 775 projects, providing overall support of EUR 1.659 million. SOCIAL 216 PART 7 217

Name of the programme Areas covered Support in EUR Number of projects The EPH Foundation supports public benefit projects • Education and Innovation To participate We support pupils and students participating in competitions and help under open grant programmes and outside the grant 50,000 30 • Culture Zúčastniť sa them in their talent development. schemes in 6 areas:

Remember The programme focuses on restoration and revitalization of cultural • Health and Sport 60,000 14 Pamätaj monuments, historical buildings or areas. • Disadvantaged groups Sport within reach Through this programme, we support young talents with difficult access 60,000 36 Sport na dosah to sports due to an unfavorable health or social situation. • Environment

Foothold The programme focuses on supporting local organizations or social 150,000 42 • Regional development Oporný bod services helping people in difficult life situations.

Real life The goal of this programme is to support organizations and services 77,330 15 Zo života focusing on hospice and palliative care.

The programme was carried out by the Association for Assistance Number Support of individuals – APPA to the Disabled (“APPA”) in cooperation with the EPH Foundation with Area of support Support in EUR 40,000 43 of projects Podpora jednotlivců – APPA the aim of support disabled individuals in rehabilitation and purchase of new equipment. Education and Innovation 232,230 27

Support Culture 93,143 11 In cooperation with Slovakia catholic charity, this programme provides of individuals – charities 110,000 365 material or food support for those in need. Health and sport 162,110 16 Podpora jednotlivců – charity Disadvantaged groups 270,781 20 Naturally We support projects in the area of nature conservation and its protection. 50,000 26 Na prírodno Regional development 42,995 2

In my area Our active employees use funds in this programme Environment 15,000 3 60,000 52 V mojom okolí to finance the development of their communities in various ways. Total 816,259 79 Energy that helps After the successful programme “In my are” we widen its scope 15,760 20 for another EPH companies. Energia, ktorá PomáHa Table 34 Areas supported by partner projects in 2019.

Municipality Through these projects, we directly contribute 169,700 53 Municipality to the development of the municipalities in which we operate.

Total 842,790 696

As usual, we picked three interesting projects for 2019 from different areas → Table 33 EPH Foundation programme allocation in 2019. SOCIAL 218 PART 7 219 Case Study Case Study Restoring Rare Pieces of Technology Improving the Quality of Life and Remembering our History of Hospice Patients

The main feature of this project was the unique cooperation of The non-profit organization RAFAEL dom n.o. operates a hospice restorers, students, volunteers and civic activists in the preservation with a capacity of 14 beds. Hospice patients in the terminal stage and restoration of a historical monument – a steam boiler with need adequate provision of medicines, medical supplies and devices. preserved parts of the heating system of Jewish ritual baths, which Unfortunately, funds from health insurance companies are unable to are part of the world cultural heritage. The project was carried out in cover all the costs of hospice care. cooperation with Vita in suburbium, o. z. Through this project, the EPH Foundation contributed to improving Our aim was to connect the work of experts with the activities of the quality of life of hospice patients. During the period from June to volunteers and youth. We want to help them to understand the September, the organization managed to secure sufficient amount importance of the specific historical value of not only the monument of medicines and medical supplies necessary for the hospice care. itself, but also the tradition. We are part of the process of developing Moreover, a new bio lamp Zepter Bioptron Pro 1 with a nano-filter cultural, social and tourist point of Bardejov city, Jewish suburbia, the stand was purchased, enabling better treatment of inflammation, most important locality of Jewish cultural heritage in Slovakia. wounds, skin lesions and other diseases.

Special emphasis was placed on experiential education of young people in connection with restoration and stabilization work. At the same time, repeated tours of the Jewish ritual buildings took place, during which students (including visitors) were introduced to the goals of the project. We consider the current generation of young people to be the bearers of the message that the Jewish cultural heritage does not only belong to the Jewish community, but forms part of our common cultural heritage.

Through our activities, we show solidarity towards disadvantaged groups and actively seek to improve their situation. SOCIAL 220 PART 7 221 Case Study International Competition RoboRAVE in China

The Association for Youth, Science and Technology participated in the RoboRAVE Slovakia 2018 competition in Žilina, where their team won the Fire Fighting autonomous robot category and also a nomination for the international round. The 2019 event was held in China and hosted 1,700 competitors from 15 countries aged 8 to 18. The AVAMET team won 5th place out of a total of 36 teams.

By participating in this competition, students gain a wide range of experience, knowledge and technical skills, and have a unique opportunity to test new technologies and methods. Assurance ASSURANCE 224 PART 8 225 ASSURANCE 226 PART 8 227 229

Annexes ANNEXES 230 PART 9 231

List of Tables, Graphs and Figures

Table 1 Principles for report content. 42 Graph 1 Total freight volume transported during the year (tonne-kilometre per year) Table 2 Principles for report quality. 42 in EPH, corresponding energy consumption and transport efficiency. 76 Table 3 EPH Group companies. 44–46 Graph 2 EBITDA comparison of our business segments. 113 Table 4 Main figures 2018 and 2017. 86–87 Graph 3 EPIF’s transmitted and distributed volumes in 2019. 115 Table 5 Main LEAG figures 2019 and 2018. 94–95 Graph 4 Net Electricity and Heat production. 119 Table 6 Stakeholder dialogue. 103 Graph 5 Net installed capacity in Electricity and Heat. 122 Table 7 SDGs with most relevance to the EPH operation. 109 Graph 6 Energy consumption development in EPH and Energy consumption in 2019 (GWh). 125 Table 8 Material topics in the environment section. 112 Graph 7 Total energy efficiency at EPH. 127 Table 9 Transmission, distribution and storage GHG emissions (tonnes). 116 Graph 8 Net electricity and heat production and their carbon intensity. 129 Table 10 Net electricity production by source (GWh). 120 Graph 9 EPH’s Direct GHG emissions (scope 1). 138 Table 11 Net Heat production by source (GWh). 121 Graph 10 Indirect GHG emissions (scope 2). 139 Table 12 Net installed capacity in electricity (in GWe). 123 Graph 11 Emission allowances usage. 139

Table 13 Net installed capacity in heat (in MWth). 123 Graph 12 CO2 emissions and emissions intensity projections. 145 Table 14 Energy consumption in GWh. 124 Graph 13 Overview of EPIF’s and EPPE generation efficiency. 146 Table 15 Selected EPH Group companies and their environmental certifications. 131–132 Graph 14 Relevant air emissions and EPH’s improvements. 148 Table 16 GHG Emission intensity in EPIF, EPPE and EPH . 140 Graph 15 Installed capacity in renewables (electricity and heat). 152

Table 17 Emission management in our segments, comparing the tonne of CO2-eq and EBITDA. 142 Graph 16 Net production in renewables (electricity and heat). 153 Table 18 Water management efficiency at EPH. 157 Graph 17 Quantity of water withdrawn and water management efficiency at EPH. 156 Table 19 Material topics in the governance section. 172 Graph 18 Total Waste generated at EPH. 161 Table 20 EPH Board of Directors. 174 Graph 19 Waste management at EPH. 161 Table 21 EPH Supervisory Board. 174 Graph 20 Byproduct generation. 163 Table 22 Board of directors of EPIF. 176 Graph 21 Employees covered by OHSAS 18001/ ISO 45001. 199 Table 23 Supervisory board of EPIF. 176 Graph 22 Employees by country in 2019. 202 Table 24 EPPE Board of Directors. 176 Graph 23 Age distribution of EPH employees. 202 Table 25 EPPE Supervisory Board. 176 Graph 24 Total number of male and female employees. 203 Table 26 EPH level policies. 179 Graph 25 Total number of male and female executives in the top and middle management. 203 Table 27 Risk groups managed at EPH. 190 Graph 26 Collective bargaining. 204 Table 28 List of significant fines during the 2019 (EUR). 193 Table 29 Material topics in the social section. 196 Table 30 Employees and contractors hours worked and incidents. 199 Table 31 Employee turnover overview. 204 Fig. 1 EPH growth. 50–51 Table 32 Training hours. 205 Fig. 2 Key operating entities of EPH. 52 Table 33 EPH Foundation programme allocation in 2019. 216 Fig. 3 EPH Company structure. 56–57 Table 34 Areas supported by partner projects in 2019. 217 Fig. 4 EPIF Business segments overview. 58–59 Table 35 Reconciliation is as follows. 233 Fig. 5 EPPE Business segments overview. 66–67 Fig. 6 Current structure of the logistics division including trading. 77 Fig. 7 Portfolio of Slovenské Elektrárne. 80 Fig. 8 Carbon Emissions of energy supply in 2019. 81 Fig. 9 The Water – Water Energetic Reactor. 83 Fig. 10 Lusatia lignite mining region overview. 92 Fig. 11 Stakeholder priorities 104 Fig. 12 Materiality matrix. 107 Fig. 13 EU Energy and climate goals 135 ANNEXES 232 PART 9 233

For the year ended 31 December 2019 EBITDA Reconciliation In millions of EUR to the Closest IFRS Measure

Gas Transmission Gas and Power distribution Gas Storage Heat Infra EPIF Other and Generation Mining Renewable Energy EPPE Other EPH Other segments Total Holding Entities Inter-segment eliminations Consolidated Financial Information It must be noted that EBITDA is not a measure that is defined Profit from under IFRS. This measure is construed as determined by the 605 369 146 93 1 154 38 - 15 1,421 (2) (1) 1,418 operations Board of Directors and is presented to disclose additional information to measure the economic performance of EPH Group’s business activities. This term should not be used as a substitute to net income, revenues or operating cash flows Depreciation or any other measure as derived in accordance with IFRS. and 130 159 29 83 3 199 81 - 10 694 - - 694 This non-IFRS measure should not be used in isolation. This amortisation measure may not be comparable to similarly titled measures Negative used by other companies. - - - - - (31) - - - (31) (30) - (61) goodwill

EBITDA 735 528 175 176 4 322 119 - 25 2,084 (32) (1) 2,051*

For the year ended 31 December 2018 In millions of EUR

Gas Transmission Gas and Power distribution Gas Storage Heat Infra EPIF Other and Generation Mining Renewable Energy EPPE Other EPH Other segments Total Holding Entities Inter-segment eliminations Consolidated Financial Information

Profit from 579 308 124 78 3 119 (3) - 16 1,224 (26) (8) 1,190 operations

Depreciation and 84 153 21 70 3 184 40 - 3 558 - - 558 amortisation

Negative - - (5) ------(5) - - (5) goodwill

EBITDA 663 461 140 148 6 303 37 - 19 1,777 (26) (8) 1,743

Table 35 Reconciliation is as follows. Note: Differences in EBITDA of segments between EPH and EPIF sustain- (*) This data has received limited aasurance from the independent ability report is only due to rounding. auditing firm KPMG. ANNEXES 234 PART 9 235

Abbreviations

BBS Behaviour Based Safety J&T J&T Finance Group SE BERT Budapesti Erőmű Zrt. KPI Key Performance Indicator CCGT Combined Cycle Gas Turbines KYC “Know your customer” is the process of a business, identifying and verifying the identity CE Central Europe: represents a region of the Czech Republic, Slovakia and Austria of its customers CHP Cogeneration LCL Less Container Load CHP Combined Heat and Power plants LEAG Lausitz Energie Bergbau AG and Lausitz Energie Kraftwerke AG

CO2 Carbon dioxide LPL Lynemouth Power Limited COP 21 Paris Climate Conference M&A Mergers and acquisitions CZK Czech koruna MAR Market Abuse Regulation EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization MIBRAG Mitteldeutsche Braunkohlengesellschaft mbH EIA Environmental Impact Assessment MIFID Markets in Financial Instruments Directive EMIR European Market Infrastructure Regulation MIRA Macquarie Infrastructure and Real Assets EMS Environmental Management System MO34 Mochovce nuclear power plant, unit 3 and unit 4

EMAS EU Eco-Management and Audit Scheme N2O Nitrous oxide EOP Elektrárny Opatovice a.s. Nafta NAFTA a.s.

EPC EP Commodities a.s. NF3 Nitrogen trifluoride EPC EP Cargo a.s. NG Natural gas EPCP EP Cargo Polska S.A. NGOs Non-governmental organisations

EPET EP Energy Trading a.s. NOx Nitrogen oxide emissions EPH Energetický a průmyslový holding, a.s. (Parent company) OCGT Open-cycle gas turbine EPIF EP Infrastructure a.s. O&M Operation & Maintenance EPLI EP Logistics International a.s. OHSAS 18001 Occupational Health and Safety Management Systems (superseded by ISO 45001) EPNEI EP New Energy Itali P2P peer-to-peer EPPE EP Power Europe a.s. PFCs Perfluorocarbons EPUKI EP UK Investments PLTEP Plzeňská Teplárenská a.s. ENO Nováky lignite power plant PV Photovoltaic EVO Vojany coal power plant REMIT Wholesale Energy Market Integrity and Transparency ESG Environment Social Governance RES Renewable Energy Sources EU European Union SAF Solid alternative fuel EUR Euro currency SAIDI System Average Interruption Duration Index FCL Full Container Load SAIFI System Average Interruption Frequency Index FSA Feed Safety Assurance SDGs Sustainable development goals

GBP British pound sterling SF6 Sulphur hexafluoride GDPR General Data Protection Regulation SNCR Selective non-catalytic reduction

GHG Greenhouse gases are those currently required by the United Nations Framework SO2 Sulphur dioxide Convention on Climate Change and the Kyoto Protocol. These GHGs are currently: SPH Slovak Power Holding BV

carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), SPP Slovenský plynárenský priemysel, a.s.

perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3) SPP-D SPP - distribúcia, a.s. GRI Global Reporting Initiative SSE Stredoslovenská energetika, a.s. H&S Health and safety SSE-D Stredoslovenská energetika - Distribúcia, a.s. (before renaming to SSD) HFCs Hydrofluorocarbons SSD Stredoslovenská distribučná, a.s. HR Human resources TSO Transmission System Operator HSEQ Health, Safety, Environment, and Quality UCF Unit capability factor IFRS International Financial Reporting Standards UE United Energy a.s. IPCC Intergovernmental Panel on Climate Change UK United Kingdom ISRS 4400 International Standard on Related Services, Engagements to Perform Agreed-Upon UGS Underground gas storage Procedures Regarding Financial Information WWER Water-water energetic reactor, light water cooled and moderated nuclear reactors ISO 14001 Certification of Environmental management system ANNEXES 236 PART 9 237

EPIF, EPPE and EPLI Companies

EPIF Companies Units Business segment: Gas Transmission # number % percentage Eustream SPP - distribúcia p.p. percentage point Eustream owns and operates a 2,332 km long gas transit SPP - distribúcia (“SPP-D“) is the owner and operator of a gas bcm billion cubic meters corridor in the Slovak Republic. Since 1972, eustream has distribution network, which accounts for approximately

CO2-eq carbon dioxide equivalent secured the transmission of more than 2,500 bcm of natural 98% of the volumes distributed in the territory of the Slovak GJ gigajoule gas across the area of Slovakia.43 The company therefore Republic. The company is responsible for the reliable, safe GW gigawatt successfully continues the tradition of the Slovak gas industry, and efficient distribution of natural gas from transmission GWh gigawatt-hour which dates back over 160 years. networks through gas distribution systems to end customers, k thousand and also for securing connection to the distribution network km kilometer The eustream transmission system is an important energy link and for meter-readings of consumed natural gas. m million between the Russian Federation and the European Union. It is mcm cubic meter connected to the main transport routes in Ukraine, the Czech The total length of pipelines on all pressure levels operated mil. tonnes million tonnes Republic, Austria and Hungary, and a new interconnection by SPP - distribúcia is now 33,323 km. Over 94% of all MW megawatt pipeline with Poland is under construction. Thanks to the inhabitants of the Slovak Republic have access to natural MWe megawatt electrical continual modernization and upgrading of its infrastructure, gas, making Slovakia the second in Europe in terms of gas MWh megawatt hour the company ensures safe and reliable supply of ecological network density. SPP - distribúcia is the Slovak leader in natural MWth megawatt thermal energy source to Central, Western and Southern Europe. gas distribution delivering its services to 28 gas suppliers PJ petajoule eustream’s business partners include major energy compa- that utilize SPP-D network to deliver gas to over 1.5 million TJ terajoule nies from both EU and non-EU member states. In 2019, we customers connected to the gas distribution system in the tkm tonne-kilometre transported 69 bcm of natural gas44, which is 16% more than whole of Slovakia. TWh terawatt hour in the previous year. The technical safety and reliability of supplies and, at the same time, cost-effective distribution of natural gas, represent the Business segment: Gas and Power Distribution pillar of the core business activities of SPP-D. Therefore, the Stredoslovenská energetika company is continuously focused on optimising its internal Stredoslovenská energetika (“SSE“) is a multi-commodity processes and individual activities with emphasis put on energy supplier in Slovakia with around 600,000 offtake maintaining the safety and reliability of the gas distribution points and in 2019 delivered almost 4.1 TWh of electricity and network. more than 51 mcm of natural gas. Besides supplying energy, it also offers comprehensive solutions for improving energy EP Energy Trading efficiency, optimising demand and energy management. EP Energy Trading (“EPET”) is one of the leading suppliers of electricity, natural gas and related services to final custom- Through its subsidiary company Stredoslovenská distribučná ers in the Czech Republic and the Slovak Republic. EPET’s (“SSD“), SSE is the second largest regional electricity distribu- core function is to use synergies with EPH Group’s other tion company in Slovakia. It owns and operates an electricity segments to cover the entire energy value chain. Among distribution network with a total length of nearly 34,000 km other things, EPET buys power generated by EPH Group’s and serves approximately 760,000 delivery points in Central Heat Infra segment and sells it to the wholesale market while Slovakia. also supplying the energy to the end customers. Currently, the company supplies over 66,000 offtake points. SSE also owns and operates a small number of generation assets with a total installed capacity of 63 MWe consisting An advantage of EP Energy Trading is the access to power of solar power plants with an aggregate capacity of 10 MWe, plants from the EP Energy group such as Elektrárny Opatovice, small plants with an aggregate capacity of 3 MWe Plzeňská Teplárenská and United Energy. Thanks to this, and a 50 MWe gas turbine dedicated to the sale of system the company is a stable partner for its customers, offering services to the Slovak TSO Slovenská elektrizačná prenosová certainty of keeping contract obligations. In 2019, the com- sústava, a.s. pany supplied its end customers in the Czech Republic and Slovakia with almost 2.9 TWh of electricity and more than 43 To show context, natural gas consumption of European Union in 2019 45 was 482 bcm (Source: EU Natural Gas Q4 2019 Report, 2020). From 1972 206 mcm of natural gas . eustream transported more than 5 times as much. 44 For comparison, in 2019, the Czech Republic consumed 8.5 bcm of gas (Source: ERO. The Fourth Quarterly Report on the Operation of Czech Gas System 2019). Eustream thus in 2019 transported 8 times more than the yearly consumption of the Czech Republic. 45 Over 2.1 TWh of natural gas. ANNEXES 238 PART 9 239

The company has been in the market for 15 years. Throughout Plzeňská teplárenská Budapesti Erőmű NAFTA that time, due to its competitive prices, professional approach, Plzeňská teplárenská is a leading heat and electricity producer Budapesti Erőmű (“BERT”) is a modern and leading heat and NAFTA is an international company with an extensive experi- flexibility and customer focus, EPET has established itself in western Bohemia in the Czech Republic. It operates a electricity producer in Budapest, Hungary with total heat and ence in underground gas storage and is a leading company as an important supplier of energies on the Czech market. combined heat and power plant running in a co-generation electricity capacity of 1,401 MWth and 396 MWe, respectively. in exploration and production of hydrocarbons. In addition, mode with a total achievable thermal capacity of 814 MWth and BERT produces approximately 55% of the district heating in the company initiates research activities as well as projects a total achievable electrical capacity of 274 MWe. Plzeňská Budapest distributed by FÖTAV47 and ~3% of total electricity focused on the storage of energy from renewable sources. Business segment: Heat Infra teplárenská operates a generation block that offers an demand in the country. BERT’s basic objective is to generate NAFTA operates not only in Slovakia and the Czech Republic, Pražská teplárenská opportunity to use coal and biomass together, which results energy from a less emission intensive energy source (natural but also in Germany, Austria and Ukraine. Pražská teplárenská is one of the largest district heating in further ecologisation of the operation. In addition, the gas), at the highest possible efficiency and with a minimum companies in the Czech Republic in terms of the number of company operates a waste to energy plant ZEVO Chotíkov environmental impact, as well as steadily and reliably. In Slovakia, NAFTA operates a system of underground gas customers. The company’s activities are concentrated in the that incinerates communal waste and efficiently generates storage with a capacity of 2.6 bcm49. Working storage volume area of Prague and surrounding areas. Pražská teplárenská heat and electricity. In total, Plzeňská teplárenská supplies As a result of the technological modernisation and improved is a dynamic variable depending primarily on its mode of use covers almost 25% of the market for thermal energy in heat to more than 50,000 customers. service quality, uninterrupted district heating at an increased by customers. The UGS facilities of NAFTA are connected Prague and delivers heat to more than 230,000 households, comfort level is already ensured for almost half a million to the Slovak distribution grid, transition system of eustream numerous office buildings, industrial companies, hundreds One of the company’s unit serves as back-up one with an consumers living in 144,000 district heated homes. For and Virtual Trading Point in Austria. of schools and health facilities and other entities. Pražská achievable output of 20 MWe. It provides ancillary services strengthening Budapest’s district heating assets and for sat- teplárenská operates in total seven heat sources with total for the operator of the Czech electricity transmission system, isfying the future energy demands, the company cooperates NAFTA Speicher installed thermal capacity of 1,046 MWth. ČEPS, supporting the operation of the Czech transmission with its strategic partners and with the local municipalities. NAFTA Speicher owns and operates natural gas storage system. The back-up unit ensures the stability and security of facilities in Germany close to the border with Austria in A major source of heat for the Prague Heat Distribution electricity supply for final customers and its technical design EP Cargo Wolfersberg, Inzenham and Breitbrunn-Eggstätt. The storage System (“PTS”) is Elektrárna Mělník I (“EMĚ I”) – operated supports very quick reactions in emergencies related to the Rail transporter which is providing efficient shipping services facilities of Nafta Speicher are directly connected to the Net by Energotrans, a subsidiary of ČEZ, supplying c. 90% of collapse and recovery of the electricity grid. to a wide range of customers. EP Cargo was licensed as Connect Germany Virtual Trading Point (NCG VTP) which is the total heat supply to PTS. Sources operated by Pražská a rail carrier in 2010. The company’s objective is to offer one of the most attractive gas trading hubs in Europe. The teplárenská – primarily heating plant Malešice, heating plant United Energy cooperation in meeting the transportation needs of wide capacity of new assets is 1.8 bcm50, representing 9% of the Michle and heating plant Krč are in place to cover winter United Energy („UE“) is an important heat producer in the range of customers, including freight forwarders, carriers, combined storage capacity in Germany. NAFTA Speicher demand peaks. Furthermore, the heat is also sourced from northern Bohemian region of the Czech Republic. It supplies manufacturing plants, as well as other companies. In 2019, is benefiting from NAFTA’s 45-year-long experience in gas a local waste-to-energy plant (ZEVO Malešice). heat to 34,000 supply points in Most and Litvínov, and also the company transported more than 5 million tonnes of load. storage business. to industrial enterprises, schools, healthcare facilities, offices Elektrárny Opatovice and various institutions. Part of the thermal energy is sold to EP Sourcing Pozagas Elektrárny Opatovice (“EOP”) supplies thermal energy for the networks of third-party heat distributors. The total length EP Sourcing supplies more than 3 million tonnes of coal POZAGAS is the second largest storage system operator more than 60,000 supply points in the Hradec Králové – of United Energy’s heat distribution network consists of more to companies United Energy, Plzeňská teplárenská and in the Slovak Republic, with its technical operation being Pardubice – Chrudim area of the Czech Republic. Among their than 140 km of distribution pipes. Elektrárna Opatovice. partially outsourced to NAFTA. Pozagas owns and operates customers are several hundred organisations such as industrial an underground gas storage facility near the town of Malacky enterprises and administrative, commercial, sport, health and United Energy operates the Komořany CHP plant near Most, in Slovakia. Business segment: Gas Storage cultural facilities. Elektrárny Opatovice’s heat supply system which burns indigenous brown coal in 10 modern fluidised- comprises approximately 319 km of heat supply networks. bed boilers meeting all environmental and public health EPH Group’s Gas Storage Business consists of NAFTA, NAFTA The company offers storage capacity service as well as other regulations. In 2019, it supplied 1.4 PJ of thermal energy. Speicher, Pozagas and SPP Storage, which store natural gas services on both a long-term and short-term basis. Storage Moreover, EOP has six co-generation boilers that produced The Komořany CHP plant also generates electricity in eight under long-term contracts in underground storage (“UGS”) capacity is of 0.7 bcm51. altogether 943 GWh of net power in 2019, which is approxi- turbine generator sets with an aggregate installed electrical facilities located in the Czech Republic, Slovakia and Germany. mately one third of the 2019 demand in the Hradec Králové capacity of 239 MWe. Since 1993, the company has earned an excellent record region46. The power station also has the capacity to supply The overall storage capacity is more than 5.7 bcm48 and offering underground natural gas storage services. Working balancing power, which helps to balance supply and demand includes assets in strategic regions connected to key gas in a liberalised natural gas market, being strategically located in the Czech electricity, and it also ensures the possibility routes. In addition to its traditional assets in Slovakia, EPIF in the proximity of Europe’s main transport routes and the of island operation in the case of the collapse of the whole operated storage facilities in South-Eastern Bavaria acquired Virtual Trading Point, Austria, as well as owning direct con- electricity grid. at the end of 2018 with capacity of almost 1.8 bcm. In 2019, nection to the hub’s infrastructure, the company has grown we also continued to invest in operational security, storage into a flexible and reliable gas storage services provider technology modernisation, automation enhancement and utili- operating in the region. sation of collected information to further optimise processes.

49 27.7 TWh. 46 Source: ERO. First to Fourth Quartal Reports on the Operation of the 47 District heating operator in Budapest. 50 19.9 TWh. Electricity Grid 2019. Published in 2020. 48 Over 61 TWh. 51 6.9 TWh. ANNEXES 240 PART 9 241

SPP Storage VTE Pchery SPP Storage operates the Dolní Bojanovice underground VTE Pchery operates wind power plants near the village EPPE Companies gas storage facility in the Czech Republic; the UGS facility of Pchery in the Kladno area, with an installed capacity was developed in depleted oil&gas reservoirs and completed of 2 × 3 MWe. Thanks to these parameters, the Pchery wind Business segment: Generation & Mining in 1999. Working gas capacity amounts to 0.7 bcm52. UGS power plant is a facility with the highest unit capacity in the Eggborough Power Ltd Dolní Bojanovice is directly connected to the Slovak under- Czech Republic. The power plant was put into operation in Eggborough Power is a former 1,960 MW coal-fired plant allowances, coal and structural products like spreads across ground gas storage facility to the Brodské metering station April 2008, with capital expenditure totalling EUR 7.5 million. situated on the River Aire in North Yorkshire, England, which Europe. EPC focuses on countries where EPH Group has its (approximately 30 kilometres away), which is also connected was closed in March 2018. In the same year, EPUKI gained assets or where liquidity enables efficient trading. Besides to the Slovak gas transit network of eustream. Alternative Energy development consent to construct a 2,500 MW Combined physical trading, it realizes financial hedging of commodi- The biogas plant in Bošany, Slovakia is a facility using the Cycle Gas Turbine (CCGT) Power Station at the site of the ties as well as sourcing portfolio of end-users in EPH Group latest technology in energy exploitation of biodegradable Renewable activities of EPIF former Eggborough Coal Power Station. companies. waste. The result of the process is the production of electricity EPIF Group also undertakes certain other activities, primarily and thermal energy production and certified fertilizers. Net If the project is concluded as feasible, the new power station EP Kilroot Limited generating electricity from renewable sources in addition installed capacity is 3 MWe. would have a gross output capacity of up to 2,500 MWs and be Kilroot power station is a coal and oil power station on the to those operated by the SSE and Plzeňská teplárenská. capable of supplying the electricity needs of around 2 million east coast of Northern Ireland, UK, commissioned in 1981. SSE owns and operates three solar power plants and holds Arisun homes. A new underground gas pipeline would be constructed The station has installed capacity 513 MW in dual-fired boilers a minority interest in another solar power plant and a majority ARISUN operates a 1 MWe photovoltaic plant in Strážske to the north of the power station in order to connect it to (coal and heavy fuel oil), along with 142 MW in four Open interest in one wind farm in the Czech Republic. EPIF Group (Slovakia). the national gas transmission system. There would also be Cycle Gas Turbines (OCGT) and 10 MW of battery energy also operates two solar power plants and a biogas facility an electrical connection to the existing substation located storage from the Kilroot Advancion Energy Storage Array, in Slovakia. In the segment of heating, majority of produc- Greeninvest Energy53 at the former coal-fired power station site and water supply which is the only grid scale operational battery storage unit tion comes from Plzeňská teplárenská due to its biomass Greeninvest Energy operates a 5.2 MW photovoltaic plant in connections. Once constructed and operational, the new gas- in Ireland with a potential to install a further 30–100 MW of combustion. Ladná in the Břeclav area. fired power station would ensure that the Eggborough Power battery storage. Together with EP Ballylumford, it secures Station site continues to make an important contribution to the over 60% of Northern Ireland’s electricity demand. Powersun security of national energy supplies and the local economy. POWERSUN operates photovoltaic power plants in Hustopeče EP Langage Limited (1 MWe) and Kyjov (2 MWe). EP Ballylumford Limited Langage is a CCGT (Combined Cycle Gas Turbine) power This natural-gas-fired power station is the largest power station located near Plymouth, Devon in South West England. Triskata station in Northern Ireland consisting of two Combined Cycle Construction of the site started in 2008 and was commis- Triskata operates a 1 MWe photovoltaic plant in Strážske Gas Turbines (CCGT) and two Open Cycle Gas Turbines sioned in 2010. Total site capacity is 905 MW. High pressure (Slovakia). (OCGT), which was built on a brown field site and began full steam system enables market leading efficiency (51.5%), commercial operation in 2003. Highly flexible CCGTs are able flexible design is capable of two-shift operation and minimum to operate in several different modes (open cycle, CCGT) load, enhancing the plant’s capabilities. The combined cycle and have the lowest minimum generation for CCGT in the provides increased flexibility to National Grid for support and Irish market. Such attributes are ideal for a system with high system services helping grid stability. levels of wind where flexibility and fast response is required. The OCGTs provide required fast response units, as well as EP Produzione S.p.A. much needed capacity. The combination of fast, flexible and Operates a total generation capacity exceeding 3,900 MW diverse thermal assets, jointly with battery storage potential, through five gas-fired power plants and one coal-fired power makes the Ballylumford portfolio attractive and ideally suited plant in Italy, making it one of the most relevant power gen- to the future market in Ireland. The potential to install battery eration players in the country. EP Produzione efficient and storage at scale (30 MW–100 MW) further enhances and high-performance power stations are managed according to diversifies the portfolio. Significant investment has been made the highest environmental, safety and reliability standards. in recent years, further enhancing Ballylumford’s competitive position within the Irish market. The power plant’s capacity is EP Produzione includes hard coal power plant Fiume Santo on 688 MW and together with EP Kilroot, it secures over 60% the Sardinia island with 599 MW of installed capacity, which of the region’s electricity supply from diverse mix of assets. is considered one of the most important industrial facilities in the north-western Sardinia. Other five gas power plants EP Commodities, a.s. are located mainly in the north of Italy – Livorno Ferraris, EP Commodities (or “EPC”) specializes in trading of energy Ostiglia, Tavazzano and Montanaso, Trapani and Scandale commodities, transit and storage capacities. The company power plant. The latter is managed by Ergosud, a joint venture deals with transactions in natural gas, power, emissions between EPH and A2A.

53 As EPIF is not majority owner of the company, this report does not 52 6.9 TWh. include the operational data from the Greeninvest. ANNEXES 242 PART 9 243

EP SHB Limited The system is characterized by relatively high availability in the Central German region alone. On this basis, mining Fusine Energia S.r.l. South Humber Bank is a gas-fired power station located rates and high reliability for the shareholders and for the helps to secure jobs also outside the company. Furthermore, Fusine Energia was created in 2006 to obtain the authorization near Stallingborough, England. Total installed capacity of the load dispatcher. the company is strongly committed to local alliances for jobs for the construction and operation of a new biomass power power plant is 1,365 MW. The site consists of two separately and for regional economic development. The MIBRAG group plant. The site is located in the province of Sondrio, Italy, and operated units with a flexible design capable of two-shift In 1979, the coal-fired power station with a net output of ini- currently employs 2,700 people, including nearly 160 trainees. operates at full capacity since June 2011. The 6 MW plant is operation with minimum load enhancing the flexibility of the tially 654 MW was put into operation. In 2003, extensive fuelled with biomass made of wood chips originating mainly plant, similarly to Langage power plant. efficiency-enhancing measures were implemented (retrofit Tynagh Energy Limited from neighbouring regions, which has a positive impact on measure at the turbine, heat recovery in the flue gas system, Tynagh is a 384 MW Combined Cycle Gas Turbine (CCGT) local economy. The yearly biomass consumption is about Gazel Energie S.A.S. optimization of cooling tower installations), which led to in east County Galway, the Republic of Ireland. The power 82,000 tonnes and the total annual production of electric- Gazel Energie (former Uniper France) is the third largest an increase in net output of 36 MW to 690 MW today and station is the only independent CCGT plant in the Irish ity reaches 41 GWh, the equivalent of powering more than energy producer in France with a diversified portfolio of coal, an increase in efficiency to around 40%. Thanks to these market and provides a flexible daily electricity product to the 11,000 households. gas and biomass fuelled power plants and wind and solar farms measures, around 80,000 tonnes of hard coal and around Irish wholesale electricity market since 2006. It is a major

with a total production capacity of 2,263 MW. Gazel Energie 180,000 tonness of CO2-eq are saved each year in the envi- player in securing electricity supply to Galway and the west Lynemouth Power Limited is also the fourth largest French provider of electricity and gas ronmental balance with comparable output. Currently, around of Ireland with 9% of the country’s electricity requirements Lynemouth Power Station (or “LPL”) is at the forefront of the for 11,500 supply points. In accordance with the French Energy 120 employees ensure safe operations of the power plant. supplied directly to the national grid. The CCGT plant was UK’s energy market as one of the most ambitious renewable Transition Act, the company has already invested more than developed on the former disused Tynagh Mines site, being energy investment projects in the UK that over recent years

€ 1.2 billion in its assets and since 2008 has reduced CO2-eq Mitteldeutsche Braunkohlengesellschaft mbH (MIBRAG) a major contributor to the local economy while minimising has been undertaken. The plant has undergone a major emissions by more than half, representing 8% of France’s In 1994, Mitteldeutsche Braunkohlengesellschaft (MIBRAG) the environmental impact. conversion programme that has seen the former coal-fired overall decarbonisation. was the first East German lignite company to be privatized. power station convert to full biomass electricity generation. Activities of the company have been focused in the south The conversion project has meant significant collaboration Business segment: Renewables Helmstedter Revier GmbH of Saxony-Anhalt – the company’s headquarters are located at amongst LPL employees, contractor partners, Government Helmstedter Revier operates the Buschhaus lignite-fired the city of Zeitz – and in the region south of Leipzig. MIBRAG Biomasse Crotone S.p.A. agencies and EPH. Now fully handed over to LPL, the plant power station and the Schöningen surface mine in Lower is the sole shareholder of companies Helmsteder Revier (HSR), The biomass-fired power plant of Crotone, owned and operated has 407 MW of net installed capacity, powering approximately Saxony in Germany. The mining history of the Helmstedter GALA-MIBRAG-Service, Bohr-und Brunnenbau, MIBRAG by Biomasse Crotone, a company acquired by EP New Energy 450,000 homes. Revier ended on August 30, 2016 after more than 140 years. Consulting International and MIBRAG Neue Energie. The Italia in December 2017, is situated in the central-eastern The extensive recultivation work in the former Schöningen company holds shares in three more entities offering a wide part of Calabria region. Crotone is a biomass-fired power Lynemouth Power Station uses sustainably sourced, renewable opencast mine began in September 2016. The Schöningen range of services from energy generation, landscaping to plant with a total capacity of 27 MW. The plant is mainly wood pellets, primarily from the USA and Canada, which are open-cast mine was the last open-cast mine of Helmstedter civil engineering, disposal, mine engineering services and the fuelled with biomass made of wood chips, derived from for- transported to the UK by sea. Carbon emissions arising from Revier GmbH supplying lignite for the Buschhaus power operation of a wind farm at the border of United Schleenhain est maintenance and agro-food residuals coming from local transportation are included in the calculation made by LPL to plant. On 1 October 2016, the Buschhaus power plant of the mine in Saxony. and national markets. The yearly biomass consumption is report against current sustainability criteria under the CfD. It HSR with a net output of 352 MW was switched to security about 300,000 tonnes, and the total annual production at is one of the largest sites of its kind in Europe and has, since readiness for four years due to the decision of the federal For more than two decades MIBRAG has made a stable full capacity is about 220 GWh. converting to biomass, reduced nitrous oxide emissions by government in order to implement the new Energy Industry Act. contribution to the security of supply in the energy and two-thirds and more than halved dust emissions. Sulphurous The power plant is no longer used by the HSR on the market. heat sector. A total up to 19 million tonnes of raw lignite are Biomasse Italia S.p.A. oxide emissions have also been reduced by more than 95% mined at both mines in Profen (Saxony-Anhalt) and United The biomass-fired power plant of Strongoli, owned and to minimal compared to previous coal generation. Kraftwerk Mehrum GmbH Schleenhain (Saxony) each year. The modern Lippendorf operated by Biomasse Italia, a company acquired by EP New Kraftwerk Mehrum GmbH operates a coal-fired power plant (Saxony) and Schkopau (Saxony-Anhalt) power plants are Energy Italia in December 2017, is situated in the central- Process safety is a crucial part of everyday operations to with a net installed capacity of 690 MW. Mehrum is located major customers of the domestic fuel. The company also eastern part of Calabria region. The 46 MW plant is mainly protect all personnel and those visiting the site. Lynemouth between the cities of Hannover and Braunschweig, Germany, includes dust plant at Deuben and industrial power plants fuelled with biomass made of wood chips, derived from forest Power Station’s exceptional safety record is testament to the north of the Mittelland Canal. The electrical output is enough at Deuben and Wählitz. MIBRAG’s industrial power plants – maintenance and agro-food residuals coming from local and robust systems and procedures in place, in particular, those to supply 700,000 households or about 1 million people among other things – supply district heating, hot water and national markets. The yearly biomass consumption is about implemented during the plant’s conversion to biomass. LPL with electrical energy, which corresponds to a supply area steam to end customers. Lignite fuel dust is further processed 400,000 tonnes, and the total annual production at full complies with and adheres to strict industry legislation, as well of the Hannover region. The operating range of the power in the cement industry. capacity is about 360 GWh. as health and safety codes, to ensure the highest operational plant is between 150 MW and 690 MW of net capacity. Due standards at all times. to the very flexible design, the system can adapt the power MIBRAG has established as reliable partner and stabilizing production to the individual needs of the power grid and factor in the economic life of Central Germany. A total share meet the increasingly fluctuating load requirements due to of about 65% of delivery contracts covering an average annual the renewable energies. order volume of EUR 180m are concluded with the companies ANNEXES 244 PART 9 245

Share participations of EPPE Ergosud S.p.A Ergosud, which is jointly owned by EPH and A2A gencogas cross-sectoral cooperation as well as energy and industrial EP Cargo Deutschland GmbH Netherlands, Austria and Slovakia. The company operates its S.p.A, built and manages the thermoelectric plant in Scandale, services for the market. With the BigBattery Lausitz, a power EP Cargo Deutschland is responsible for forwarding services own terminal with reloading station for intermodal transports. Italy. The plant belongs to the most advanced and modern storage facility is being established at the Schwarze Pumpe within the framework of rail transports in Germany and also Locon Logistik & Consulting AG has been specializing in rail electricity generation powerplants, thanks to the use of the site that is unique in Europe. Continuous operations start in other EU countries. It specializes, among other things, in the construction projects for more than 17 years: from concept innovative combined cycle technology. It adopts the most summer 2020. With the virtual power plants “LEAG energy transport of black and brown coal, energy gypsum, fly ash, and planning, through the provision of technical equipment advanced construction technologies in order to minimize the cubes” there is the opportunity of connecting assets of energy byproducts, etc. It provides complex customer services, and personnel, to precise implementation (e.g. in the recent environmental impact and maximize the thermal efficiency different sizes and functions to agile, virtual units for the including transport optimization, delivery of suitable type move of a steel bridge on two parallel rolling stocks). (which reaches 56.67%, one of the best values achievable electricity market. In addition, there are the services of the of carriages for special transports, route planning, securing with this type of system). By combining two thermodynamic subsidiaries of Lausitz Energie Bergbau AG. Transport- und of the last mile, handling of relevant documents, etc. LokoTrain, s.r.o. cycles (the Brayton cycle and the ), the com- Speditionsgesellschaft Schwarze Pumpe mbH (TSS GmbH), A company providing training in the rail industry. It provides bined cycle allows to optimize the exploitation of the energy is a full-service provider for logistics, material and warehouse EP Cargo Polska S.A. service work and education for carriers, railway operators contained in the fuel (natural gas). management. The company deals with rail transport, rail forwarding and and companies engaged in the repair, maintenance and freight forwarding from ports at national and international modernization of railway infrastructure and other services The Scandale plant has set environmental protection and the Slovenské elektrárne, a.s. level. It provides loading in the ports of Gdańsk, Gdynia, related to railway issues. Within its own LokoPool, it offers health and safety of workers as its primary objective. Adopting Slovenské elektrárne (or “SE”) is the largest electricity Szczecin, Swinoujscie, and also loading in national ports locomotive rentals in the Czech Republic, Slovakia, Poland, the most advanced technical solutions, the plant has been producer in Slovakia, operating two nuclear, two thermal, on the eastern border. EPCP specializes in the transport of Germany, Austria and Hungary. Within its own PersPool, it achieving one of the lowest emission limits in the sector, 31 hydroelectric and two photovoltaic power plants, generating brown and black coal, limestone and energy byproducts and offers a possibility of renting a train drivers, carriage and proving the combined cycle technology to be one of the most over 70% of the country’s total electricity production. With offers complex transportation services for power plants and wagon examiners and shunting masters in the Czech Republic, efficient ways of producing electricity. In addition, the plant gross capacity of 4,081 MWe, it is one of the largest electricity industrial plants in the Czech Republic, Germany and Poland. Slovakia and Poland. The company also offers counselling is equipped with a "zero liquid discharge" system that allows producers in Central and Eastern Europe. Its unique portfolio For customers, EPCP implements railway transport optimiza- and consultations in railway transport, organizes trainings, to reuse all wastewater, including part of rainwater, limiting enables it to produce up to 92.5% of electricity without tion projects, individual siding management and operation, seminars and conferences focused on the railway segment the use of water from the outside to a minimum. greenhouse gases, avoiding 15 million tonness of carbon special transportation of technical equipment, optimization and provides proper training and courses for locomotive dioxide emissions every year. of own siding operation, etc. drivers and other necessary trainings about railway traffic The Scandale plant, prepared for cogeneration, consists of two and transport. equal, independent modules with a total capacity of 834 MW SE primarily sells electricity on a fully liberalized wholesale EP Intermodal a.s. (417 MW per module). electricity market, but the company is also the main supplier EP Intermodal is a company providing customized project SPEDICA GROUP COMPANIES, s.r.o. of support services in Slovakia. Through its affiliates, the solutions in the field of continental combined transport that The SPEDICA Group is a holding company of RM LINES, LEAG company sells electricity, gas, heat and energy services to subsequently puts into practice and ensures reliable function- Railsped, SPEDICA LOGISTIC, s.r.o. and SPEDICA, s.r.o. LEAG as a brand stands jointly for two key operating compa- end customers in Slovakia, the Czech Republic and Poland. ing of the entire process. The main objective of the company is The group offers one-stop tailor-made logistics solutions nies and their subsidiaries: Lausitz Energie Bergbau AG and Its client portfolio also includes some of the largest industrial to analyze the current state of the European transport system including the following: Rail transportation supporting both Lausitz Energie Kraftwerke AG. The main area of operation companies in the region. and to focus on combined transport according to the partners’ European and Asian markets, Ocean freight transport services is the Lusatian mining district – the second largest mining requirements. The company offers independent and flexible to and from all major seaports worldwide (FCL, LCL and district in Germany. service based on the knowledge and long-term experience in breakbulk cargo, Eurasian rail container transport services, EPLI Companies the area of development and sustainability of the intermodal International and domestic full truck/rail car transports LEAG is the largest power plant operator in eastern Germany, EOP & HOKA, s.r.o. transport network. within the European Union, International and domestic parcel and also among the biggest private employers in this area. EOP & HOKA provides road freight transport of loose materi- collection and delivery, Supply chain planning supported by The portfolio comprises mining, refining and generating als in silo tanks and tipping semi-trailers. It has its own fleet LOCON Logistik & Consulting AG multi-modal transport to optimize the given solution, Supply electricity and heat from lignite. LEAG operates four mines of more than 100 wagons. Operating in the Czech Republic, Locon Logistik & Consulting AG is a German railway company Chain Management according to client’s individual needs, (Jänschwalde, Welzow-Süd, Nochten and Reichwalde), four Slovakia, Poland, Germany and Austria, the company handles specialized in transporting goods, materials and containers Complex transport and logistics services, Rail transport and power plants (Jänschwalde, Lippendorf, Schwarze Pumpe bulk substrates with focus on operating coal mines, coal as well as railway construction. The company has a portfolio logistics operations certified by the Czech Rail Authorities to and Boxberg) and one refining plant (Schwarze Pumpe). mining and operating of the rear fuel cycle of power plants of more than 250 cars and 30 locomotives, over 150 employ- operate on both private rail spurs and also on the complete including material solutions. The company also provides ees, including highly qualified professionals, and operates existing Czech rail infrastructure (National railway in the Additionally, LEAG is expanding their business areas. solutions for handling secondary energy products (EN450 its own repair service. The company carries out shipments Czech Republic, Rail siding), Transport and freight insurance Therefore, the focus is set on future-oriented energy technolo- fly ash, energy gypsum, slag…). throughout Germany, both regular (e.g. from the German ports and control of transport assets to insure effective operations gies in the fields of renewable energy, electricity storage and of Wilhelmshaven and Bremerhaven) and ad hoc shipments, and services. including cross-border to Belgium, the Czech Republic, the ANNEXES 246 PART 9 247

GRI Content Index

GRI 102 General disclosures 2016

Organisational profile Ethics and integrity

GRI Standard Description Section of the Report Reference page GRI Standard Description Section of the Report Reference page

102-1 Name of the organization 1 Foreword 6–9 102-16 Values, principles, standards, and 6 Governance: Our business ethics 179 norms of behavior 102-2 Activities, brands, products and 3 EPH and its business: Business Areas 58–73 services 102-17 Mechanisms for advice and concerns 6 Governance: Whistleblower policies 184–185 about ethics 102-3 Location of headquarters 3 EPH and its business 175

102-4 Location of operations 3 EPH and its business: Geographic 52–53 presence Governance 102-5 Ownership and legal form - EPH Annual report 2019

102-6 Markets served 3 EPH and its business: Overview 52–53 GRI Standard Description Section of the Report Reference page of EPH business activities 102-18 Governance structure 6 Governance: Corporate governance 173–175 102-7 Scale of the organization 3 EPH and its business: Overview 56–57 of EPH business activities 102-19 Delegating authority 6 Governance: Corporate governance 175 at the sub-holding level 102-8 Information on employees and other 7 Social: Our employees 199–205 workers 102-20 Executive-level responsibility for 6 Governance: EPH Management 179 economic, environmental, and social 102-9 Supply chain 6 Governance: Procurement practices 187–188 topics

102-10 Significant changes to the 6 Governance: Procurement practices 187–188 102-22 Composition of the highest 6 Governance: EPH Management 176–178 organization and its supply chain governance body and its committees

102-11 Precautionary Principle or approach 6 Governance: Risk management at EPH 189–193 102-23 Chair of the highest governance body 6 Governance: EPH Board member 177 profiles 102-12 External initiatives 7 Social: Community involvement 211–221 and selected social initiatives 102-33 Communicating critical concerns 6 Governance: Policies and specialized 179 committees 102-13 Membership of associations – EPH Foundation Annual report 2019

Stakeholder engagement Strategy

GRI Standard Description Section of the Report Reference page GRI Standard Description Section of the Report Reference page 102-40 List of stakeholder groups 4 Materiality analysis: Our stakeholders 103 102-14 Statement from senior decision-maker 1 Foreword 6–9 102-41 Collective bargaining agreements 7 Social: Our employees 204–205 102-15 Key impacts, risks, and opportunities 4 Materiality analysis: Our stakeholders 102–104 102-42 Identifying and selecting stakeholders 4 Materiality analysis: Our stakeholders 102–103 6 Governance: Risk management at EPH 189–193 102-43 Approach to stakeholder engagement 4 Materiality analysis: Engagement 105 with stakeholders during 2019

102-44 Key topics and concerns raised 4 Materiality analysis: Our stakeholders 107 ANNEXES 248 PART 9 249

GRI 300 Environment Standards 2016

Reporting practices Energy

GRI Standard Description Section of the Report Reference page GRI Standard Description Section of the Report Reference page

102-45 Entities included in the consolidated 2 About this report: Organizational 44–46 103-1 Explanation of the material topic and 4 Materiality analysis 107–108 financial statements boundaries its Boundary

102-46 Defining report content and topic 2 About this report: Report boundaries 43 103-2 The management approach and 5 Environment: Environmental 130 Boundaries its components management system

102-47 List of material topics 4 Materiality analysis: Materiality matrix 107 103-3 Evaluation of the management 6 Governance 170 approach 102-48 Restatements of information 2 About this report: Restatements 47 of information 302-1 Energy consumption 5 Environment: Energy consumption 124–125

102-49 Changes in reporting 2 About this report: Changes in reporting 47

102-50 Reporting period Fiscal year 2019 40 Water and Effluents 102-51 Date of most recent report Colophon 294

102-52 Reporting cycle Annual 40 GRI Standard Description Section of the Report Reference page

102-53 Contact point for questions regarding [email protected] – 103-1 Explanation of the material topic 4 Materiality analysis 107–108 the report and its Boundary

102-54 Claims of reporting in accordance with 2 About this report: Principles of our 41 103-2 The management approach and 5 Environment: Environmental 156–157, 160–161 the GRI Standards Report its components management system

102-55 GRI content index GRI Content Index 246 103-3 Evaluation of the management 6 Governance 170 approach 102-56 External Assurance 2 About this report: Assurance 222 303-1 Quantity of water withdrawn 5 Environment: Water 157 ANNEXES 250 PART 9 251

GRI 400 Social Standards 2016

Emissions Employment

GRI Standard Description Section of the Report Reference page GRI Standard Description Section of the Report Reference page

103-1 Explanation of the material topic and 4 Materiality analysis 107–108 103-1 Explanation of the material topic 4 Materiality analysis 107–108 its Boundary and its Boundary

103-2 The management approach and its 5 Environment: Environmental 133–147 103-2 The management approach 7 Social: Our employees 201 components management system and its components

103-3 Evaluation of the management 6 Governance 170 103-3 Evaluation of the management 6 Governance 170 approach approach

305-1 Direct GHG Emissions 5 Environment: GHG emissions: Our 142 401-1 New hires and employee turnover 7 Social: Our employees 204 business and climate change

305-4 Emissions intensity – electricity only 5 Environment: GHG emission 142 + Emissions intensity – including heat intensity efficiency component Occupational health and safety 305-7 Emissions 5 Environment: GHG emissions: 133 Our business and climate change GRI Standard Description Section of the Report Reference page

103-1 Explanation of the material topic 4 Materiality analysis 107–108 and its Boundary Effluents and waste 103-2 The management approach 7 Social: Health and Safety at EPH 197–198 and its components GRI Standard Description Section of the Report Reference page 103-3 Evaluation of the management 6 Governance 170 103-1 Explanation of the material topic 4 Materiality analysis 107–108 approach and its Boundary 403-2 Employee on the job injuries, 7 Social: Health and Safety at EPH 199 103-2 The management approach 5 Environment: Environmental 160–161 contractors on the job injuries and its components management system

103-3 Evaluation of the management 6 Governance 170 approach Training and education 306-1 Quantity of water discharged 5 Environment: Water 167

306-2 Waste produced / Byproducts production 5 Environment: Effluents and waste 161, 163 GRI Standard Description Section of the Report Reference page

103-1 Explanation of the material topic 4 Materiality analysis 107–108 and its Boundary

103-2 The management approach 7 Social: Training and development 205 Environmental compliance and its components

103-3 Evaluation of the management 6 Governance 170 GRI Standard Description Section of the Report Reference page approach

103-1 Explanation of the material topic and 4 Materiality analysis 107–108 404-1 Training 7 Social: Training and development 205 its Boundary

103-2 The management approach and its 6 Governance: Investigations, 193 components litigations and sanctions

103-3 Evaluation of the management 6 Governance 170 approach

307-1 Environmental fines 6 Governance: Investigations, 193 litigations and sanctions ANNEXES 252 PART 9 253

GRI 200 Economic Standards

Economic performance Marketing and labeling

GRI Standard Description Section of the Report Reference page GRI Standard Description Section of the Report Reference page 103-1 Explanation of the material topic 4 Materiality analysis 107–108 103-1 Explanation of the material topic 4 Materiality analysis 107–108 and its Boundary and its Boundary 103-2 The management approach - EPH Annual report 2019 103-2 The management approach 6 Social: Relation to our customers 207–208 and its components and its components and EPH’s approach 103-3 Evaluation of the management 6 Governance 170 103-3 Evaluation of the management 6 Governance 170 approach approach 201-1 Direct economic value generated - EPH Annual report 2019 417-2 Incidents of non-compliance 6 Governance: Investigations, 193 and distributed concerning product and service litigations and sanctions information and labeling 201-3 Defined planned obligations - EPH Annual report 2019 and other retirement plans

Socioeconomic compliance Anti-corruption

GRI Standard Description Section of the Report Reference page GRI Standard Description Section of the Report Reference page 103-1 Explanation of the material topic 4 Materiality analysis 107–108 and its Boundary 103-1 Explanation of the material topic 4 Materiality analysis 107–108 and its Boundary 103-2 The management approach 6 Governance: Investigations, litigations 193 and its components and sanctions 103-2 The management approach 6 Governance: EPH level policies 179 and its components and specialized committees 103-3 Evaluation of the management approach 6 Governance 170 103-3 Evaluation of the management 6 Governance 170 419-1 Other significant fines 6 Governance: Investigations, litigations 193 approach and sanctions 205-2 Communication and training about 6 Governance: EPH level policies 179 anticorruption policies and procedures and specialized committees ANNEXES 254 PART 9 255

Performance indicators EPH and its business For the year ended 31 December 2019

Data reported for the whole year or from date of acquisition of particular plant excluding share participations. For more information please refer to the section 2 Organisational boundaries, Pages 43–46.

EPH and its business

For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU1 Net installed capacity – Electricity – Total EU1 Net installed capacity – Electricity – Conventional sources

EU1 EP Infrastructure EU1 EP Infrastructure

Czech Republic MW 1,031 1,031 868 – 0% Czech Republic MW 1,008 1,008 859 – 0%

Slovakia MW 68 67 67 0 1% Slovakia MW 50 50 50 – 0%

Hungary MW 396 396 396 – 0% Hungary MW 396 396 396 – 0%

Total – EP Infrastructure MW 1,495 1,494 1,331 0 0% Total – EP Infrastructure MW 1,454 1,454 1,305 – 0%

EP Power Europe EP Power Europe

France MW 2,262 – – 2,262 France MW 2,018 – – 2,018

Germany MW 1,147 1,147 1,147 – 0% Germany MW 1,140 1,140 1,140 – 0%

UK MW 4,025 4,637 4,625 (612) (13%) UK MW 3,608 4,230 4,230 (622) (15%)

Ireland MW 384 – – 384 Ireland MW 384 – – 384

Italy MW 3,989 4,284 4,284 (294) (7%) Italy MW 3,907 4,207 4,207 (300) (7%)

Total – EP Power Europe MW 11,807 10,067 10,056 1,740 17% Total – EP Power Europe MW 11,057 9,577 9,577 1,480 15%

Total – EPH MW 13,302 11,561 11,387 1,741 15% Total – EPH MW 12,511 11,031 10, 881 1,480 13%

Note: UK excludes Eggborough power plant (1,960 MW) from 2019 as it was decommissioned in 2018. This site was sold in February 2019. ANNEXES 256 PART 9 257

EPH and its business EPH and its business

For the year ended 31 December 2019 For the year ended 31 December 2019

Fuel

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU1 Net installed capacity – Electricity – Renewable sources EU1 Net installed capacity – Electricity – Total

EU1 EP Infrastructure EU1 EP Infrastructure

Czech Republic MW 23 23 9 – – Conventional sources MW 1,454.1 1,454.1 1,304.5 – 0%

Slovakia MW 18 17 17 0 3% Renewable sources MW 40.5 40.0 26.5 0 1%

Germany MW – – – – Total – EP Infrastructure MW 1,494.5 1,494.0 1,331.0 0 0%

Hungary MW – – – –

Total – EP Infrastructure MW 40 40 26 0 1% EP Power Europe

Conventional sources MW 11,056.9 9,576.5 9,576.5 1,480 15%

EP Power Europe Renewable sources MW 750.6 490.8 479.0 260 53%

France MW 244 – – 244 Total – EP Power Europe MW 11,807.5 10,067.3 10,055.5 1,740 17%

Germany MW 7 7 7 – –

UK MW 417 407 395 10 2% Total – EPH MW 13,302.0 11,561.3 11,386.5 1,741 15%

Ireland MW – – – –

Italy MW 83 77 77 6 7%

Total – EP Power Europe MW 751 491 479 260 53% GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU1 Net installed capacity – Electricity – Conventional sources

Total – EPH MW 791 531 506 260 49% EU1 EP Infrastructure

Hard coal MW 110.0 110.0 110.0 – 0% Note: Lynemouth biomass conversion project was in progress from 2016. Production from biomass started in 2018. Note: We excluded 3 MW capacity of Greeninvest from EPIF as these are not IFRS consolidated in both 2019 and 2018. Lignite MW 847.5 847.5 707.0 – 0%

CCGT MW 396.0 396.0 396.0 – 0%

OCGT and other NG MW 70.5 70.5 70.5 – 0%

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % Oil MW 19.6 19.6 21.0 – 0%

EU1 Net installed capacity – Heat Other MW 10.5 10.5 – – 0%

EU1 EP Infrastructure Total – EP Infrastructure MW 1,454.1 1,454.1 1,304.5 – 0%

Czech Republic MW 4,136 4,223 3,519 (87) (2%)

Hungary MW 1,401 1,401 1,401 – 0% EP Power Europe

Total – EP Infrastructure MW 5,537 5,624 4,920 (87) (2%) Hard coal MW 2,829.0 3,248.5 3,248.5 (420) (13%)

Lignite MW 450.0 450.0 450.0 – 0%

EP Power Europe CCGT MW 7,131.2 5,352.0 5,352.0 1,779 33%

Germany MW 156 156 156 – 0% OCGT and other NG MW 470.2 213.4 213.4 257 120%

Total – EP Power Europe MW 156 156 156 – 0% Oil MW 163.9 300.0 300.0 (136) (45%)

Other MW 12.6 12.6 12.6 – 0%

Total – EPH MW 5,693 5,780 5,076 (87) (2%) Total – EP Power Europe MW 11,056.9 9,576.5 9,576.5 1,480 15%

Total – EPH MW 12,511.0 11,030.6 10,881.0 1,480 13%

Note: Hard coal in EPPE excludes Eggborough power plant (1.960 MW) from 2019 as it was decommissioned in 2018. This site was sold in February 2019. Note: Change in oil capacity in EPPE in 2019 is connected to EP Produzione, where the capacity is not suitable for operation, so it is newly exceluded. ANNEXES 258 PART 9 259

EPH and its business EPH and its business

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU1 Net installed capacity – Electricity – Renewable sources EU1 Net power production – Total

EU1 EP Infrastructure EU1 EP Infrastructure

Wind MW 6 6 6 – 0% Czech Republic TWh 1.9 2.6 2.3 (0.7) (27%)

Photovoltaic MW 15 15 15 – 0% Slovakia TWh 0.0 0.0 0.0 0.0 6%

Hydro MW 3 3 3 0 19% Hungary TWh 1.4 1.2 1.3 0.2 14%

Biomass MW 14 14 – – 0% Total – EP Infrastructure TWh 3.4 3.9 3.7 (0.5) (14%)

Other MW 3 3 3 – 0%

Total – EP Infrastructure MW 40.5 40.0 26.5 0 1% EP Power Europe

France TWh 2.4 – – 2.4

EP Power Europe Germany TWh 1.4 3.2 1.0 (1.8) (58%)

Wind MW 90 7 7 84 1211% UK TWh 11.0 7. 9 3.7 3.2 40%

Photovoltaic MW 13 2 2 11 421% Ireland TWh 0.3 – – 0.3

Hydro MW 2 2 2 – 0% Italy TWh 15.0 13.3 15.0 1.7 13%

Biomass MW 636 480 468 156 32% Total – EP Power Europe TWh 30.1 24.4 19.8 5.7 23%

Other MW 10 – – 10

Total – EP Power Europe MW 751 491 479 260 53% Total – EPH TWh 33.4 28.3 23.5 5.1 18%

Total – EPH MW 791 531 506 260 49%

Note: Biomass is including also Lynemouth biomass net installed capacity (conversion project). GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % EU2 Net power production – Conventional sources

EU2 EP Infrastructure

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % Czech Republic TWh 1.8 2.5 2.3 (0.7) (28%)

EU1 Net installed capacity – Heat Slovakia TWh 0.0 0.0 0.0 0.0 0%

EU1 EP Infrastructure Hungary TWh 1.4 1.2 1.3 0.2 14%

Hard coal MW 242.0 242.0 242.0 – 0% Total – EP Infrastructure TWh 3.2 3.7 3.7 (0.5) (14%) Lignite MW 2,767.4 2,872.4 2,239.0 (105) (4%)

CCGT MW 1,400.9 1,400.9 1,400.9 – 0% EP Power Europe

OCGT and other NG MW 821.9 803.9 803.9 18 2% France TWh 2.2 – – 2.2

Oil MW 234.0 234.0 234.0 – 0% Germany TWh 1.4 3.2 1.0 (1.8) (58%)

Other MW 70.3 70.3 – – 0% UK TWh 8.6 6.5 3.7 2.1 33%

Total – EP Infrastructure MW 5,537 5,624 4,920 (87) (2%) Ireland TWh 0.3 – – 0.3

Italy TWh 14.4 12.7 15.0 1.7 13%

EP Power Europe Total – EP Power Europe TWh 26.9 22.4 19.7 4.5 20% Lignite MW 156.0 156.0 156.0 – 0%

Total – EP Power Europe MW 156 156 156 – 0% Total – EPH TWh 30.0 26.1 23.4 3.9 15%

Total – EPH MW 5,692.5 5,779.5 5,075.8 (87) (2%) ANNEXES 260 PART 9 261

EPH and its business EPH and its business

For the year ended 31 December 2019 For the year ended 31 December 2019

Fuel

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU2 Net power production – Renewable sources EU2 Net power production – Total

EU2 EP Infrastructure EU2 EP Infrastructure

Czech Republic GWh 154.7 176.3 10.9 (21.6) (12%) Conventional sources TWh 3.2 3.7 3.7 (0.5) (14%)

Slovakia GWh 29.7 28.2 29.2 1.6 6% Renewable sources TWh 0.2 0.2 0.0 (0.0) (10%)

Total – EP Infrastructure GWh 184.4 204.4 40.1 (20.0) (10%) Total – EP Infrastructure TWh 3.4 3.9 3.7 (0.5) (14%)

EP Power Europe EP Power Europe

France GWh 149.8 – – 149.8 Conventional sources TWh 26.9 22.4 19.7 4.5 20%

Germany GWh 14.4 12.3 15.1 2.1 17% Renewable sources TWh 3.2 2.0 0.0 1.2 61%

UK GWh 2,441.0 1,390.7 – 1,050.3 76% Total – EP Power Europe TWh 30.1 24.4 19.8 5.7 23%

Italy GWh 598.3 590.2 5.6 8.1 1%

Total – EP Power Europe GWh 3,203.4 1,993.1 20.7 1,210.3 61% Total – EPH TWh 33.4 28.3 23.5 5.1 18%

Total – EPH GWh 3,387.8 2,197.6 60.8 1,190.3 54%

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU2 Net power production – Conventional sources

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % EP Infrastructure

EU2 Net heat production Lignite TWh 1.7 2.4 2.3 (0.7) (29%)

EU2 EP Infrastructure CCGT TWh 1.4 1.2 1.3 0.2 14%

Czech Republic TWh 2.6 2.6 2.0 (0.0) (1%) OCGT and other NG TWh 0.0 0.0 0.0 0.0 0%

Hungary TWh 1.7 1.7 1.9 (0.0) (3%) Oil TWh (0.0) (0.0) (0.0) 0.0 (11%)

Total – EP Infrastructure TWh 4.3 4.3 3.9 (0.1) (1%) Other TWh 0.0 0.0 – 0.0 25%

Total – EP Infrastructure TWh 3.2 3.7 3.7 (0.5) (14%)

EP Power Europe

Germany TWh 0.0 0.3 0.4 (0.3) (99%) EP Power Europe

Total – EP Power Europe TWh 0.0 0.3 0.4 (0.3) (99%) Hard coal TWh 4.6 6.3 4.9 (1.6) (26%) Lignite TWh 0.6 0.6 0.7 0.0 0%

Total – EPH TWh 4.3 4.6 4.3 (0.4) (8%) CCGT TWh 21.6 15.5 13.9 6.1 39% OCGT and other NG TWh 0.0 0.0 0.2 0.0 177%

Oil TWh 0.0 – – 0.0

Other TWh 0.0 0.0 0.0 (0.0) (29%)

Total – EP Power Europe TWh 26.9 22.4 19.7 4.5 20%

Total – EPH TWh 30.0 26.1 23.4 3.9 15% ANNEXES 262 PART 9 263

EPH and its business EPH and its business

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU2 Net power production – Renewable sources EU2 Total net energy production

EU2 EP Infrastructure EU2 EP Infrastructure

Wind GWh 9 7 7 2 30% Czech Republic TWh 4.5 5.2 4.4 (0.7) (14%)

Photovoltaic GWh 16 17 17 (1) (3%) Slovakia TWh 0.0 0.0 0.0 0.0 6%

Hydro GWh 6 5 5 2 41% Hungary TWh 3.1 2.9 3.2 0.1 4%

Biomass GWh 142 166 – (23) (14%) Total – EP Infrastructure TWh 7.6 8.2 7.6 (0.6) (7%)

Other GWh 10 10 10 0 1%

Total – EP Infrastructure GWh 184 204 40 (20) (10%) EP Power Europe

France TWh 2.4 – – 2.4

EP Power Europe Germany TWh 1.4 3.5 1.4 (2.2) (61%)

Wind GWh 92 12 15 80 648% UK TWh 11.0 7. 9 3.7 3.2 40%

Photovoltaic GWh 11 3 2 8 235% Ireland TWh 0.3 – – 0.3

Hydro GWh 2 2 4 0 13% Italy TWh 15.0 13.3 15.0 1.7 13%

Biomass GWh 3,099 1,976 – 1,123 57% Total – EP Power Europe TWh 30.1 24.7 20.1 5.4 22%

Total – EP Power Europe GWh 3,203 1,993 21 1,210 61%

Total – EPH TWh 37.7 32.9 27.7 4.8 14%

Total – EPH GWh 3,388 2,198 61 1,190 54% Note: Includes electric energy and heat production.

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

EU2 Net heat production

EU2 EP Infrastructure

Lignite TWh 2.3 2.3 1.9 0.0 1%

CCGT TWh 1.7 1.7 1.9 (0.0) (3%)

OCGT and other NG TWh 0.0 0.1 0.2 (0.0) (50%)

Oil TWh 0.0 0.0 0.0 0.0 10%

Other TWh 0.2 0.2 – (0.0) (3%)

Total – EP Infrastructure TWh 4.3 4.3 3.9 (0.1) (1%)

EP Power Europe

Lignite TWh 0.0 0.3 0.3 (0.3) (100%)

Oil TWh 0.0 0.0 0.0 (0.0) (1%)

Total – EP Power Europe TWh 0.0 0.3 0.4 (0.3) (99%)

Total – EPH TWh 4.3 4.6 4.3 (0.4) (8%) ANNEXES 264 PART 9 265

EPH and its business Environment / Climate change and energy

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-9 Amount of electric energy sold G4-EN3 Energy consumption

102-7 EP Infrastructure 302-1 EP Infrastructure

Czech Republic TWh 5.1 5.4 4.7 (0.2) (4%) Czech Republic PJ 35.1 (*) 44.5 (*) 38.7 (*) (9.3) (21%)

Slovakia TWh 4.1 4.0 3.9 0.1 4% Slovakia PJ 8.6 (*) 6.5 (*) 7.1 2.1 32%

Hungary TWh 1.5 1.3 1.3 0.2 17% Germany PJ 0.3 – – 0.3

Total – EP Infrastructure TWh 10.8 10.6 9.9 0.2 2% Hungary PJ 14.3 (*) 12.9 (*) 14.1 1.3 10%

Total – EP Infrastructure PJ 58.3 63.9 59.9 (5.6) (9%)

EP Power Europe

France TWh 11.1 – – 11.1 EP Power Europe

Czech Republic TWh 20.4 4.8 0.0 15.6 321% France PJ 15.3 – – 15.3

Germany TWh 1.0 2.9 0.7 (1.8) (63%) Germany PJ 18.0 35.2 14.5 (17.2) (49%)

UK TWh 11.0 7. 9 3.5 3.1 39% UK PJ 90.8 (*) 66.1 30.7 24.7 37%

Ireland TWh 0.4 – – 0.4 Ireland PJ 2.3 – – 2.3

Italy TWh 15.7 14.0 15.5 1.7 12% Italy PJ 118.2 106.6 108.4 11.6 11%

Total – EP Power Europe TWh 59.6 29.6 19.8 30.0 102% Total – EP Power Europe PJ 244.6 207.9 153.6 36.7 18%

Total – EPH TWh 70.4 40.2 29.7 30.2 75% EP Logistics international

Czech Republic PJ 0.0 0.0 0.0 (0.0) (100%) Note: Includes sales of generated as well as procured electric energy. Germany PJ 0.0 – – 0.0

Total – EP Logistics International PJ 0.0 0.0 0.0 (0.0) (100%)

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % Other companies within the Group G4-9 Heat supplied to district heating network Czech Republic PJ 0.0 0.1 0.1 (0.1) (100%) 102-7 EP Infrastructure Poland PJ – 0.0 0.0 (0.0) (100%) Czech Republic PJ 16.5 16.5 15.2 (0.1) 0% Total – Other companies within the Group PJ 0.0 0.1 0.1 (0.1) (100%) Hungary PJ 6.0 6.2 6.7 (0.2) (3%)

Total – EP Infrastructure PJ 22.5 22.7 21.9 (0.2) (1%) Total – EPH PJ 303.0 271.9 213.7 31.0 11.41%

EP Power Europe (*) This data has received limited assurance from the independent auditing firm EY (2018 and previous years) and KPMG (2019). Germany PJ 0.4 0.4 0.4 0.0 2%

Total – EP Power Europe PJ 0.4 0.4 0.4 0.0 2%

Total – EPH PJ 22.9 23.1 22.3 (0.2) (1%)

Note: Before heat losses in district heating networks. ANNEXES 266 PART 9 267

Environment / Climate change and energy Environment / Climate change and energy

For the year ended 31 December 2019 For the year ended 31 December 2019

Fuel Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 – 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 – 2018 %

G4-EN3 Energy consumption G4-EN15 Direct GHG Emissions (Scope 1)

302-1 EP Infrastructure 305-1 EP Infrastructure

million tons Hard Coal PJ – 2.4 6.0 (2.4) (100%) Czech Republic 2.8 3.7 3.5 (0.9) (25%) CO2 eq. Lignite PJ 31.2 37.7 31.5 (6.5) (17%) million tons Slovakia 0.4 0.3 0.4 0.1 34% Natural Gas PJ 23.5 20.0 22.1 3.6 18% CO2 eq. million tons Oil PJ 0.0 0.0 0.2 (0.0) (30%) Germany 0.0 – – 0.0 CO2 eq. Diesel PJ 0.0 0.0 0.0 0.0 9% million tons Hungary 0.8 0.7 0.8 0.1 9% CO eq. Purchased Electricity PJ 0.2 0.1 0.1 0.0 12% 2 million tons Biomass PJ 2.4 2.7 – (0.3) (11%) Total – EP Infrastructure 4.1 4.8 4.7 (0.7) (15%) CO2 eq. Other PJ 1.0 0.9 0.0 0.1 9%

Total – EP Infrastructure PJ 58.3 63.9 59.9 (5.6) (9%) EP Power Europe

million tons France 0.8 – – 0.8 CO2 eq. EP Power Europe million tons Germany 1.8 3.3 1.4 (1.6) (47%) Hard Coal PJ 49.5 64.6 50.9 (15.1) (23%) CO2 eq. million tons Lignite PJ 9.7 9.6 10.6 0.2 2% UK 3.7 2.9 2.0 0.8 29% CO2 eq. Natural Gas PJ 152.0 109.6 91.2 42.4 39% million tons Ireland 0.1 – – 0.1 CO eq. Oil PJ 0.3 0.5 0.1 (0.1) (31%) 2 million tons Diesel PJ 0.4 2.0 0.2 (1.6) (81%) Italy 7. 6 6.8 7. 9 0.8 11% CO2 eq. Purchased Electricity PJ 0.3 0.5 0.2 (0.1) (30%) million tons Total – EP Power Europe 14.0 13.0 11.4 1.0 8% CO eq. Purchased Heat PJ 0.0 0.0 0.0 0.0 4% 2

Biomass PJ 32.3 21.2 0.2 11.1 52% million tons Total – EPH 18.1 17.8 16.1 0.3 1% Other PJ 0.1 0.0 0.0 0.1 720478% CO2 eq. Total – EP Power Europe PJ 244.6 207.9 153.4 36.7 18%

EP Logistics international

Diesel PJ 0.1 0.0 0.0 0.1 1528%

Purchased Electricity PJ 0.1 0.0 0.0 0.0 308%

Other PJ 0.0 0.0 0.0 0.0 275%

Total – EP Logistics International PJ 0.1 0.0 0.0 0.1 575%

Other companies within the Group

Diesel PJ 0.1 0.1 0.1 (0.0) (19%)

Purchased Electricity PJ – – – –

Other PJ 0.0 0.0 0.0 0.0 9%

Total – Other companies within the Group PJ 0.1 0.1 0.1 (0.0) (18%)

Total – EPH PJ 303.2 271.9 213.4 31.2 11% ANNEXES 268 PART 9 269

Environment / Climate change and energy Environment / Climate change and energy

For the year ended 31 December 2019 For the year ended 31 December 2019

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN18 GHG Emissions intensity – Including heat component G4-EN3 Indirect GHG Emissions (Scope 2)

EP Infrastructure 305-2 EP Infrastructure

ton CO eq./ Czech Republic ton CO eq. 65,350 68,388 (3,039) (4%) Czech Republic 2 625 714 797 (89) (12%) 2 GWh Slovakia ton CO eq. 6,193 6,187 5 0% ton CO eq./ 2 Slovakia 2 9 10 27 (0) (5%) GWh Germany ton CO2 eq. 1,354 – 1,354 ton CO eq./ Germany 2 – – – – Hungary ton CO eq. 3,026 5,149 (2,123) (41%) GWh 2 Total – EP Infrastructure ton CO eq. 75,922 79,725 – (3,803) (5%) ton CO eq./ 2 Hungary 2 258 247 250 11 4% GWh

ton CO eq./ Total – EP Infrastructure 2 474 544 564 (70) (13%) GWh EP Power Europe

Germany ton CO2 eq. 22,405 19,274 3,131 16%

EP Power Europe UK ton CO2 eq. 17,692 11,249 6,443 57%

ton CO eq./ Ireland ton CO eq. 390 – 390 France 2 352 – – 352 2 GWh

Italy ton CO2 eq. 1,569 2,390 (821) (34%) ton CO eq./ Germany 2 1,285 949 1 045 336 35% GWh Total – EP Power Europe ton CO2 eq. 42,056 32,913 – 9,143 28% ton CO eq./ UK 2 339 368 551 (30) (8%) GWh Total – EPH ton CO eq. 117,978 112,638 – 5,340 5% ton CO eq./ 2 Ireland 2 392 – – 392 GWh

ton CO eq./ Italy 2 505 510 529 (5) (1%) GWh

ton CO eq./ Total – EP Power Europe 2 466 527 568 (61) (12%) GWh

ton CO eq./ Total – EPH 2 468 531 567 (63) (12%) GWh

Note: Calculation of Emissions intensity indicators excludes emissions from non-energy producing operations, namely Eustram, SPP - distribúcia and NAFTA in Slovakia and SPP

Storage in the Czech Republic and in respective summary indicators, in the ammount of 0.5 and 0.3 mil ton of CO2 in 2019 and 2018 respectively. ANNEXES 270 PART 9 271

Environment / Air emissions Environment / Air emissions

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN21 Total SO2 emissions G4-EN21 Total dust emissions

305-7 EP Infrastructure 305-7 EP Infrastructure

Czech Republic thousand tons 5.3 7. 8 7. 7 (2.5) (32%) Czech Republic thousand tons 0.1 0.2 0.3 (0.1) (41%)

Slovakia thousand tons 0.0 0.0 0.0 (0.0) (17%) Slovakia thousand tons 0.0 0.0 0.0 0.0 3%

Hungary thousand tons 0.0 0.0 – (0.0) (21%) Hungary thousand tons 0.0 – 0.0 0.0

Total – EP Infrastructure thousand tons 5.3 7.8 7.7 (2.5) (32%) Total – EP Infrastructure thousand tons 0.1 0.2 0.3 (0.1) (40%)

EP Power Europe EP Power Europe

France thousand tons 0.1 – – 0.1 France thousand tons 0.0 – – 0.0

Germany thousand tons 1.6 2.6 1.4 (1.1) (40%) Germany thousand tons 0.0 0.0 0.0 (0.0) (49%)

UK thousand tons 0.5 0.7 1.3 (0.2) (25%) UK thousand tons 0.0 0.1 0.2 (0.1) (79%)

Ireland thousand tons 0.0 – – 0.0 Italy thousand tons 0.1 0.1 0.1 (0.0) (20%)

Italy thousand tons 1.8 1.5 1.8 0.4 26% Total – EP Power Europe thousand tons 0.1 0.2 0.3 (0.1) (40%)

Total – EP Power Europe thousand tons 4.0 4.8 4.5 (0.8) (16%)

Total – EPH thousand tons 0.3 0.5 0.6 (0.2) (40%)

Total – EPH thousand tons 9.4 12.6 12.1 (3.2) (26%)

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN21 Total NOx emissions G4-EN21 SO2 emissions intensity

305-7 EP Infrastructure 305-7 EP Infrastructure

Czech Republic thousand tons 3.0 3.8 3.4 (0.8) (20%) Czech Republic ton / GWh 1.2 1.5 1.7 (0.3) (21%)

Slovakia thousand tons 0.4 0.3 0.3 0.1 35% Slovakia ton / GWh 0.0 0.0 0.0 (0.0) (63%)

Hungary thousand tons 0.4 0.4 0.5 (0.0) (2%) Hungary ton / GWh 0.0 0.0 – (0.0) (24%)

Total – EP Infrastructure thousand tons 3.8 4.5 4.2 (0.7) (15%) Total – EP Infrastructure ton / GWh 0.7 1.0 1.0 (0.3) (26%)

EP Power Europe EP Power Europe

France thousand tons 0.3 – – 0.3 France ton / GWh 0.0 – – 0.0

Germany thousand tons 1.2 2.3 1.0 (1.1) (48%) Germany ton / GWh 1.2 0.7 1.0 0.4 54%

UK thousand tons 2.3 2.4 1.6 (0.1) (5%) UK ton / GWh 0.0 0.1 0.4 (0.0) (46%)

Ireland thousand tons 0.1 – – 0.1 Ireland ton / GWh 0.0 – – 0.0

Italy thousand tons 4.2 3.1 3.1 1.0 33% Italy ton / GWh 0.1 0.1 0.1 0.0 12%

Total – EP Power Europe thousand tons 8.0 7.9 5.6 0.1 2% Total – EP Power Europe ton / GWh 0.1 0.2 0.2 (0.1) (31%)

Total – EPH thousand tons 11.8 12.3 9.8 (0.5) (4%) Total – EPH ton / GWh 0.25 0.38 0.44 (0.1) (35%) ANNEXES 272 PART 9 273

Environment / Air emissions Environment / Water

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN21 NOx emissions intensity G4-EN8 Quantity of water withdrawn

305-7 EP Infrastructure 303-1 EP Infrastructure

Czech Republic ton / GWh 0.7 0.7 0.8 (0.1) (7%) Czech Republic million m3 54.6* 75.0* 127.2 (20.4) (27%)

Slovakia ton / GWh 0.6 0.6 0.6 (0.0) (6%) Slovakia million m3 0.0* 0.0 0.0 (0.0) (11%)

Hungary ton / GWh 0.1 0.1 0.1 (0.0) (6%) Germany million m3 0.0 – – 0.0

Total – EP Infrastructure ton / GWh 0.45 0.51 0.52 (0.1) (12%) Hungary million m3 14.4* 10.4 14.8 4.0 39%

Total – EP Infrastructure million m3 69.0 85.4 142.1 (16.4) (19%)

EP Power Europe

France ton / GWh 0.1 – – 0.1 EP Power Europe

Germany ton / GWh 0.9 0.7 0.7 0.2 34% France million m3 3.2 – – 3.2

UK ton / GWh 0.2 0.3 0.4 (0.1) (32%) Germany million m3 94.2 99.7 100.7 (5.5) (5%)

Ireland ton / GWh 0.2 – – 0.2 UK million m3 1,410.2* 878.0 258.1 532.1 61%

Italy ton / GWh 0.3 0.2 0.2 0.0 18% Ireland million m3 0.0 – – 0.0

Total – EP Power Europe ton / GWh 0.27 0.32 0.28 (0.1) (17%) Italy million m3 1,451.7 1,341.0 1,504.0 110.7 8%

Total – EP Power Europe million m3 2,959.2 2,318.7 1,862.8 640.6 28%

Total – EPH ton / GWh 0.30 0.37 0.34 (0.1) (17%)

Total – EPH million m3 3,028.2 2,404.0 2,004.9 624.2 26%

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN21 Dust emissions intensity G4-EN22 Quantity of water discharged

305-7 EP Infrastructure 306-1 EP Infrastructure

Czech Republic ton / GWh 0.03 0.04 0.06 (0.01) (31%) Czech Republic million m3 47.1* 64.9* 122.0 (17.8) (27%)

Slovakia ton / GWh 0.02 0.02 0.02 (0.00) (5%) Slovakia million m3 0.1* 0.1 0.1 0.0 13%

Hungary ton / GWh 0.00 – 0.00 0.00 Germany million m3 0.0 – – 0.0

Total – EP Infrastructure ton / GWh 0.02 0.03 0.03 (0.01) (36%) Hungary million m3 13.8* 9.8 14.4 4.0 41%

Total – EP Infrastructure million m3 61.1 74.9 136.5 (13.8) (18%)

EP Power Europe

France ton / GWh 0.00 – – 0.0 EP Power Europe

Germany ton / GWh 0.01 0.01 0.01 0.00 33% France million m3 2.0 – – 2.0

UK ton / GWh 0.00 0.01 0.04 (0.01) (85%) Germany million m3 1.8 2.8 1.3 (1.0) (37%)

Italy ton / GWh 0.01 0.01 0.01 (0.00) (29%) UK million m3 1,409.8* 876.8 252.3 533.0 61%

Total – EP Power Europe ton / GWh 0.005 0.010 0.015 (0.00) (51%) Ireland million m3 0.0 – – 0.0

Italy million m3 1,445.2 1,340.6 1,504.6 104.7 8%

Total – EPH ton / GWh 0.01 0.01 0.02 (0.01) (48%) Total – EP Power Europe million m3 2,858.8 2,220.2 1,758.1 638.6 29%

Note: Calculation of Emissions intensity indicators excludes emissions from non-energy producing operations. namely eustram. SPP - distribúcia. Nafta and Pozagas in Slovakia 3 and SPP Storage in the Czech Republic and in respective summary indicators. in ammount of 20 tonnes NOx in CZ in 2018 (18 tonnes in 2018 and 10 tonnes in 2017). 334 tonnes Total – EPH million m 2,919.9 2,295.0 1,894.7 624.8 27% NO in SK in 2019 (244 ton in 2018 and 296 tonnes in 2017) and 6 tonnes dust in SK in 2019 (5 tonnes in 2018 and 2 tonnes in 2017). x (*) This data has received limited assurance from the independent auditing firm EY (2018) and KPMG (2019). ANNEXES 274 PART 9 275

Environment / Water Environment / Effluents and waste

For the year ended 31 December 2019 For the year ended 31 December 2019

Type Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN8 Quantity of water withdrawn G4-EN23 Byproducts – Total production

303-1 EP Infrastructure 306-2 EP Infrastructure

Surface water million m3 66.7 83.2 140.5 (16.5) (20%) Czech Republic thousand tons 1,118.7 1,488.1 1,496.4 (369.4) (25%)

Ground water million m3 0.1 0.1 0.1 (0.0) (8%) Hungary thousand tons 0.3 0.3 0.3 (0.0) (6%)

Municipal water supplies or other water utilities million m3 1.7 1.6 0.9 0.1 7% Total – EP Infrastructure thousand tons 1,119.0 1,488.4 1,496.6 (369.4) (25%)

Other million m3 0.6 0.5 0.7 0.0 8%

Total – EP Infrastructure million m3 69.0 85.4 142.1 (16.4) (19%) EP Power Europe

France thousand tons 50.1 – – 50.1

EP Power Europe Germany thousand tons 204.3 318.8 209.8 (114.6) (36%)

Surface water million m3 2,891.3 2,259.6 1,799.1 631.7 28% UK thousand tons 43.4 54.5 70.0 (11.2) (20%)

Ground water million m3 66.0 58.0 63.1 8.0 14% Italy thousand tons 143.7 135.9 143.9 7. 8 6%

Municipal water supplies or other water utilities million m3 1.9 1.0 0.6 0.8 79% Total – EP Power Europe thousand tons 441.4 509.2 423.7 (67.8) (13%)

Other million m3 0.0 0.0 – 0.0 109%

Total – EP Power Europe million m3 2,959.2 2,318.7 1,862.8 640.6 28% Total – EPH thousand tons 1,560.4 1,997.6 1,920.3 (437.2) (22%)

Total – EPH million m3 3,028.2 2,404.0 2,004.9 624.2 26%

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN23 Waste other than byproducts – Total production

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % 306-2 EP Infrastructure

G4-EN8 Cooling Water Czech Republic thousand tons 2.0 2.6 2.4 (0.6) (23%)

303-1 EP Infrastructure Slovakia thousand tons 42.8 35.8 40.2 7.0 20%

Cooling water – withdrawal million m3 64.3 80.8 138.8 (16.5) (20%) Germany thousand tons 0.8 – – 0.8

Cooling water – discharge million m3 57.8 72.1 133.2 (14.3) (20%) Hungary thousand tons 0.0 0.0 0.1 (0.0) (91%)

Total – EP Infrastructure – Usage million m3 6.6 8.7 5.6 (2.2) (25%) Total – EP Infrastructure thousand tons 45.6 38.5 42.7 7.1 18%

EP Power Europe EP Power Europe

Cooling water – withdrawal million m3 2,856.7 2,225.7 1,763.5 631.0 28% France thousand tons 0.8 – – 0.8

Cooling water – discharge million m3 2,852.6 2,217.0 1,757.0 635.6 29% Germany thousand tons 239.8 216.5 198.0 23.3 11%

Total – EP Power Europe – Usage million m3 4.1 8.7 6.4 (4.6) (53%) UK thousand tons 3.7 3.0 4.0 0.6 21% Ireland thousand tons 0.0 – – 0.0

Total – EPH – Usage million m3 10.6 17.4 12.0 (6.8) (39%) Italy thousand tons 27.5 26.9 2.4 0.7 2%

Total – EP Power Europe thousand tons 271.9 246.4 204.4 25.4 10%

Total – EPH thousand tons 317.5 284.9 247.1 32.6 11% ANNEXES 276 PART 9 277

Environment / Effluents and waste Environment / Effluents and waste

For the year ended 31 December 2019 For the year ended 31 December 2019

Type

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN23 Byproducts – Total production G4-EN23 Byproducts – Total by means of disposal

306-2 EP Infrastructure 306-2 EP Infrastructure

Additised granulate thousand tons 215.3 332.0 478.7 (116.7) (35%) Sales thousand tons 169.5 128.4 136.4 41.1 32%

Ash thousand tons 489.2 564.1 486.7 (74.9) (13%) Storage – own stock thousand tons 157.0 209.3 149.4 (52.2) (25%)

Slag thousand tons 161.3 223.5 187.9 (62.2) (28%) Storage – external thousand tons 210.9 213.7 81.7 (2.7) (1%)

Gypsum thousand tons 139.5 171.9 155.3 (32.4) (19%) Stabilizate production thousand tons 362.9 597.6 648.1 (234.7) (39%)

Additional material – hydrated lime thousand tons 15.1 27.6 22.9 (12.5) (45%) Storage – chargeable waste thousand tons 218.7 339.5 481.1 (120.8) (36%)

Additional material – water thousand tons 97.1 167.7 165.2 (70.6) (42%) Total – EP Infrastructure thousand tons 1,119.0 1,488.4 1,496.6 (369.4) (25%)

Other own production thousand tons 1.6 1.6 – 0.0 0%

Total – EP Infrastructure thousand tons 1,119.0 1,488.4 1,496.6 (369.4) (25%) EP Power Europe

Sales thousand tons 202.4 263.2 164.0 (60.9) (23%)

EP Power Europe Storage – own stock thousand tons 24.4 3 7.1 27.0 (12.7) (34%)

Additised granulate thousand tons – – – – Storage – external thousand tons 0.6 0.6 0.6 (0.0) (3%)

Ash thousand tons 287.3 300.6 256.9 (13.3) (4%) Stabilizate production thousand tons 201.5 188.7 216.3 12.8 7%

Slag thousand tons 57.5 57.2 54.7 0.3 1% Storage – chargeable waste thousand tons 22.1 (7.2) 2.6 29.3 (408%)

Gypsum thousand tons 96.0 151.5 112.1 (55.4) (37%) Other thousand tons 25.2 17.3 16.6 7. 9 45%

Additional material – hydrated lime thousand tons – – – – Total – EP Power Europe thousand tons 476.1 499.8 427.1 (23.7) (5%)

Additional material – water thousand tons – – – –

Other own production – please specify thousand tons 0.6 – – 0.6 Total – EPH thousand tons 1,595.1 1,988.2 1,923.7 (393.1) (20%)

Other additional material – please specify thousand tons – – – –

Total – EP Power Europe thousand tons 441.4 509.2 423.7 (67.8) (13%)

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % Total – EPH thousand tons 1,560.4 1,997.6 1,920.3 (437.2) (22%) G4-EN23 Waste other than byproducts – Total production

306-2 EP Infrastructure

Non-hazardous waste thousand tons 42.5 36.4 40.8 6.1 17%

Hazardous waste thousand tons 3.1 2.1 1.9 1.0 48%

Total – EP Infrastructure thousand tons 45.6 38.5 42.7 7.1 18%

EP Power Europe

Non-hazardous waste thousand tons 269.5 241.2 200.5 28.3 12%

Hazardous waste thousand tons 2.4 5.2 3.8 (2.9) (55%)

Total – EP Power Europe thousand tons 271.9 246.4 204.4 25.4 10%

Total – EPH thousand tons 317.5 284.9 247.1 32.6 11% ANNEXES 278 PART 9 279

Environment / Effluents and waste Social / Occupational health and safety

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

G4-EN23 Waste other than by products – Non-hazardous – Disposal 403-2 Fatal injuries – Employees

306-2 EP Infrastructure G4-LA6 EP Infrastructure

Recycling thousand tons 19.1 14.5 6.2 4.6 32% Czech Republic # – – – –

Landfill thousand tons 3.9 4.2 3.1 (0.3) (8%) Slovakia # – – 1 –

Other thousand tons 19.6 17.7 31.5 1.8 10% Germany # – – – –

Total – EP Infrastructure thousand tons 42.5 36.4 40.8 6.1 17% Hungary # – – – –

Netherlands # – – –

EP Power Europe Total – EP Infrastructure # – – 1 –

Recycling thousand tons 110.9 80.6 54.2 30.3 38%

Landfill thousand tons 33.5 23.1 1.5 10.4 45% EP Power Europe

Other thousand tons 125.0 142.5 144.8 (17.5) (12%) Czech Republic # – – – –

Total – EP Power Europe thousand tons 269.4 246.2 200.5 23.2 9% France # – – – –

Germany # – – – –

Total – EPH thousand tons 311.9 282.6 241.3 29.3 10% UK # – – – –

Ireland # – – – –

Italy # – – – –

Switzerland # – – – – GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % Total – EP Power Europe # – – – – G4-EN23 Waste other than by products – Hazardous – Disposal

306-2 EP Infrastructure Other companies within the Group Recycling thousand tons 0.3 0.2 0.7 0.1 64% Czech Republic # – – – – Landfill thousand tons 1.1 1.4 0.5 (0.3) (23%) Poland # – – – – Other thousand tons 1.8 0.6 0.7 1.2 224% Slovakia # – – – – Total – EP Infrastructure thousand tons 3.1 2.1 1.9 1.0 48% Hungary # – – – –

Germany # – – – – EP Power Europe UK # – – – – Recycling thousand tons 2.1 5.0 2.1 (2.9) (58%) Italy # – – – – Landfill thousand tons 0.2 0.2 1.7 0.0 19% Netherlands # – – – – Other thousand tons 0.0 – – 0.0 Total – other comapnies # – – – – Total – EP Power Europe thousand tons 2.3 5.2 3.8 (2.9) (55%)

Total – EPH # – – 1 – Total – EPH thousand tons 5.5 7.3 5.7 (1.8) (25%) ANNEXES 280 PART 9 281

Social / Occupational health and safety Social / Occupational health and safety

For the year ended 31 December 2019 For the year ended 31 December 2019

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

403-2 Registered injuries – Employees 403-2 Worked hours – Employees

G4-LA6 EP Infrastructure G4-LA6 EP Infrastructure

Czech Republic # 16* 13* 12 3 23% Czech Republic million hours 3.4 3.7 3.2 (0.3) (9%)

Slovakia # 20* 13 15 7 54% Slovakia million hours 6.9 5.8 6.9 1.0 17%

Hungary # 1* 3 2 (2) (67%) Germany million hours 0.1 – – 0.1

Total – EP Infrastructure # 37 29 29 8 28% Hungary million hours 0.4 0.4 0.4 0.0 3%

Netherlands million hours 0.0 – 0.0

EP Power Europe Total – EP Infrastructure million hours 10.7 9.9 10.4 0.8 8%

France # 2 – – 2

Germany # 15 27 28 (12) (44%) EP Power Europe

UK # 2* – – 2 Czech Republic million hours 0.2 0.1 0.1 0.0 29%

Italy # – 3 1 (3) (100%) France million hours 0.3 – – 0.3

Total – EP Power Europe 19 30 29 (11) (37%) Germany million hours 3.8 3.7 4.3 0.1 2%

UK million hours 0.9 1.5 0.7 (0.5) (37%)

Other companies within the Group Ireland million hours 0.0 – – 0.0

Czech Republic # 6* 5* 6 1 20% Italy million hours 1.0 0.9 0.5 0.1 7%

Poland # – 1 – (1) (100%) Switzerland million hours 0.0 – – 0.0

Germany # 1 – – 1 Total – EP Power Europe million hours 6.2 6.2 5.5 (0.0) 0%

Total – other comapnies # 7 6 6 1 17%

Other companies within the Group

Total – EPH # 63 65 64 (2) (3%) Czech Republic million hours 0.8 0.5 0.5 0.3 65%

Poland million hours 0.3 0.2 0.2 0.0 16% Note: Registered injury – in order to be able to report standardised injury data from across all our operations, for the purpose of this Sustainability Report, all injuries that Slovakia million hours 0.0 0.0 – 0.0 65% resulted in at least 3 lost working days have been reported. This is a stricter definition than many companies use for their respective national reporting. (*) This data has received limited assurance from the independent auditing firm EY (2018) and KPMG (2019). Germany million hours 0.1 0.0 0.0 0.1 4808%

Netherlands million hours – – 0.0 –

Total – other comapnies million hours 1.2 0.7 0.7 0.5 63%

Total – EPH million hours 18.1 16.8 16.7 1.3 8% ANNEXES 282 PART 9 283

Social / Occupational health and safety Social / Occupational health and safety

For the year ended 31 December 2019 For the year ended 31 December 2019

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 %

403-2 Injury Frequency Rate – Employees 403-2 Fatal injuries – Contractors

G4-LA6 EP Infrastructure G4-LA6 EP Infrastructure

Czech Republic index 4.8 3.5 3.8 1.2 35% Czech Republic # – – – –

Slovakia index 2.9 2.2 2.2 0.7 31% Slovakia # 1 – – 1

Hungary index 2.7 8.3 5.1 (5.6) (67%) Germany # – – – –

Total – EP Infrastructure index 3.5 2.9 2.8 0.5 18% Hungary # – – – –

Netherlands # – – – –

EP Power Europe Total – EP Infrastructure # 1 – – 1

France index 6.3 – – 6.3

Germany index 4.0 7. 3 6.6 (3.3) (46%) EP Power Europe

UK index 2.1 – – 2.1 Czech Republic # – – – –

Italy index – 3.4 2.1 (3.4) (100%) France # – – – –

Total – EP Power Europe index 3.1 4.9 5.2 (1.8) (36%) Germany # – – – –

UK # – – – –

Other companies within the Group Ireland # – – – –

Czech Republic index 7.1 9.7 12.4 (2.6) (27%) Italy # – – – –

Poland index – 4.4 – (4.4) (100%) Switzerland # – – – –

Germany index 9.8 – 9.8 Total – EP Power Europe # – – – –

Total – other comapnies index 5.7 8.0 8.3 (2.3) (29%)

Other companies within the Group

Total – EPH index 3.49 3.87 3.83 (0.4) (10%) Czech Republic # – – – –

Poland # – – – – Note: Injury frequency rate reported on per 1 million hours worked basis. Slovakia # – – – –

Hungary # – – – –

Germany # – – – –

UK # – – – –

Italy # – – – –

Netherlands # – – – –

Total – other comapnies # – – – –

Total – EPH # 1.0 – – 1.0 ANNEXES 284 PART 9 285

Social / Occupational health and safety Social / Employment

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

GRI / EUSS KPI Unit 2019 2018 2017 2019 - 2018 % GRI / EUSS KPI Unit Total Male Female

403-2 Registered injuries – Contractors 102-7 Headcount (FTE)

G4-LA6 EP Infrastructure G4-9 EP Infrastructure

Czech Republic # – – 1 – Czech Republic FTE 1,982 1,595 386

Slovakia # – 1 – (1.0) (100%) Slovakia FTE 4,209 3,353 856

Germany # – – – – Germany FTE 58 51 7

Hungary # – – – – Hungary FTE 208 173 35

Netherlands # – – – Netherlands FTE 2 1 1

Total – EP Infrastructure # – 1 1 (1.0) (100%) Total – EP Infrastructure FTE 6,458 5,173 1,285

EP Power Europe EP Power Europe

Czech Republic # – – – – Czech Republic FTE 88 71 17

France # 2 – – 2.0 France FTE 518 406 112

Germany # 5 4 5 1.0 25% Germany FTE 2,516 2,164 352

UK # 2 2 8 – 0% UK FTE 506 450 55

Ireland # – – – – Ireland FTE 11 8 3

Italy # 1 11 1 (10.0) (91%) Italy FTE 582 514 68

Switzerland # – – – – Switzerland FTE 4 3 1

Total – EP Power Europe # 10 17 15 (7.0) (41%) Total – EP Power Europe FTE 4,225 3,616 609

Other companies within the Group Other companies within the Group

Czech Republic # – – – – Czech Republic FTE 459 342 117

Poland # – – – – Poland FTE 153 122 31

Slovakia # – – – – Slovakia FTE 5 4 1

Hungary # – – – – Germany FTE 154 129 25

Germany # – – – – Total – other comapnies FTE 771 597 173

UK # – – – –

Italy # – – – – Total – EPH FTE 11,453 9,386 2,068

Netherlands # – – – –

Total – other comapnies # – – – –

Total – EPH # 10 18 16 (8.0) (44%)

Note: Contractor injuries data not available for United Energy and Renewables Group, data on hours worked by contractors largerly not available, thus injury frequency rate not reported. Restatement: Registrated injuries of contractors were not reported by two of our companies by mistake in 2018, this was corrected in 2019 data submission, thus the total registrated injuries increased from 13 to 18 for 2018. ANNEXES 286 PART 9 287

Social / Employment Social / Employment

For the year ended 31 December 2019 For the year ended 31 December 2019

GRI / EUSS KPI Unit Total 19 % of total GRI / EUSS KPI Unit Total Male Female

102-41 Employees with collective bargining agreements 401-1 Number of new hires – Total

G4-11 EP Infrastructure EP Infrastructure

Czech Republic FTE 1,783 90% Czech Republic FTE 198 139 59

Slovakia FTE 4,158 99% Slovakia FTE 327 209 118

Germany FTE 52 90% Germany FTE 4 3 1

Hungary FTE 207 100% Hungary FTE 24 23 1

Total – EP Infrastructure FTE 6,200 96% Total – EP Infrastructure FTE 553 374 179

EP Power Europe EP Power Europe

Czech Republic FTE – – Czech Republic FTE 31 22 9

France FTE 518 100% France FTE 6 2 4

Germany FTE 2,356 94% Germany FTE 133 115 18

UK FTE 365 72% UK FTE 41 34 7

Italy FTE 582 100% Italy FTE 18 12 6

Total – EP Power Europe FTE 3,821 90% Switzerland FTE 4 3 1

Total – EP Power Europe FTE 233 188 45

Other companies within the Group

Czech Republic FTE 22 5% Other companies within the Group

Poland FTE 119 78% Czech Republic FTE 130 111 19

Total – other comapnies FTE 141 18% Poland FTE 101 90 11

Slovakia FTE 2 1 1

Total – EPH FTE 10,161 89% Germany FTE 8 8 –

Total – other comapnies FTE 241 210 31

Total – EPH FTE 1,027 772 255 ANNEXES 288 PART 9 289

Social / Employment Social / Employment

For the year ended 31 December 2019 For the year ended 31 December 2019

GRI / EUSS KPI Unit Total Male Female GRI / EUSS KPI Unit Total Male Female

401-1 Number of leavers – Total G4-LA1 New hires rate

EP Infrastructure EP Infrastructure

Czech Republic FTE 204 118 86 Czech Republic % 10% 9% 15%

Slovakia FTE 276 185 91 Slovakia % 8% 6% 14%

Germany FTE 5 4 1 Germany % 8% 7% 15%

Hungary FTE 12 9 3 Hungary % 12% 13% 3%

Total – EP Infrastructure FTE 497 316 181 Total – EP Infrastructure % 9% 7% 14%

EP Power Europe EP Power Europe

Czech Republic FTE 21 18 3 Czech Republic % 35% 31% 52%

France FTE 41 28 13 France % 1% 0% 4%

Germany FTE 219 184 35 Germany % 5% 5% 5%

UK FTE 52 48 4 UK % 8% 8% 13%

Italy FTE 21 18 3 Italy % 3% 2% 9%

Total – EP Power Europe FTE 354 296 58 Switzerland % 100% 100% 100%

Total – EP Power Europe 6% 5% 7%

Other companies within the Group

Czech Republic FTE 130 113 17 Other companies within the Group

Poland FTE 101 94 7 Czech Republic % 28% 32% 16%

Slovakia FTE 1 – 1 Poland % 66% 74% 36%

Germany FTE 5 4 1 Slovakia % 40% 25% 100%

Total – other comapnies FTE 237 211 26 Germany % 5% 6% 0%

Total – other comapnies % 31% 35% 18%

Total – EPH FTE 1,088 823 265

Total – EPH % % 9% 8% 12% ANNEXES 290 PART 9 291

Social / Employment Social / Training

For the year ended 31 December 2019 For the year ended 31 December 2019

Country

Hours per GRI / EUSS KPI Unit Hours GRI / EUSS KPI Unit Total Male Female Employee

G4-LA1 Employee turnover rate G4-LA9 Total training hours – all employees

EP Infrastructure EP Infrastructure

Czech Republic % 10% 7% 22% Czech Republic # 25,082 12.7

Slovakia % 7% 6% 11% Slovakia # 170,036 –

Germany % 9% 8% 18% Germany # 463 8.0

Hungary % 6% 5% 9% Hungary # 2 047 9.8

Total – EP Infrastructure % 8% 6% 14% Total – EP Infrastructure # 197,627 30.6

EP Power Europe EP Power Europe

Czech Republic % 24% 25% 17% Czech Republic # 1,284 14.6

France % 8% 7% 12% France # 5,729 11.1

Germany % 9% 9% 10% Germany # 34,278 13.6

UK % 10% 11% 7% UK # 13,745 27.2

Italy % 4% 4% 4% Italy # 15,657 26.9

Total – EP Power Europe % 8% 8% 10% Total – EP Power Europe # 70,692 16.7

Other companies within the Group Other companies within the Group

Czech Republic % 28% 33% 15% Czech Republic # 11,009 24.0

Poland % 66% 77% 23% Poland # 4,616 30.3

Slovakia % 20% 0% 100% Total – other comapnies # 16,627 21.6

Germany % 3% 3% 4%

Total – other comapnies % 31% 35% 15% Total – EPH # 284,946 24.9

Restatement: Amount in 2018 was showing incomplete infomation: The correct amount of training hours in 2018 was 258 Total – EPH % 10% 9% 13% thousands. The dfference was identified in the cathegory “Other companies withing the Group”. ANNEXES 292 PART 9 293

Social / Employment Social / Employment

For the year ended 31 December 2019 For the year ended 31 December 2019

Country Employees Employees Employees between GRI / EUSS KPI Unit under over Permanent Temporary 30 and GRI / EUSS KPI Unit 30 years old 50 years old contract contract ale 50 years old

102-8 Employees: pernament and temporary contract 405-1 Employees: pernament and temporary contract

EP Infrastructure EP Infrastructure

Czech Republic % 95% 5% Czech Republic % FTE 9% 49% 42%

Slovakia % 91% 9% Slovakia % FTE 8% 52% 40%

Germany % 95% 5% Germany % FTE 10% 39% 51%

Hungary % 99% 1% Hungary % FTE 2% 52% 45%

Netherlands % 100% 0% Netherlands % FTE 0% 100% 0%

Total – EP Infrastructure % 92% 8% Total – EP Infrastructure % FTE 8% 51% 41%

EP Power Europe EP Power Europe

Czech Republic % 91% 9% Czech Republic % FTE 29% 64% 3%

France % 96% 4% France % FTE 19% 52% 29%

Germany % 92% 8% Germany % FTE 20% 30% 46%

UK % 98% 2% UK % FTE 9% 34% 28%

Ireland % 100% 0% Ireland % FTE 9% 82% 9%

Italy % 99% 1% Italy % FTE 2% 41% 57%

Switzerland % 100% 0% Switzerland % FTE 0% 75% 25%

Total – EP Power Europe % 94% 6% Total – EP Power Europe % FTE 16% 36% 42%

Other companies within the Group Other companies within the Group

Czech Republic % 85% 13% Czech Republic % FTE 12% 61% 25%

Poland % 62% 38% Poland % FTE 33% 56% 10%

Slovakia % 80% 20% Slovakia % FTE 0% 80% 20%

Germany % 100% 0% Germany % FTE 9% 55% 36%

Total – other comapnies % 83% 15% Total – other comapnies % FTE 16% 59% 24%

Total – EPH % 93% 7% Total – EPH % FTE 11% 46% 40% EPH Sustainability Report 2019

Published in November 2020 by Energetický a průmyslový holding, a. s. Pařížská 26 110 00 Prague 1 Czech Republic

Contact Phone: +420 232 005 200 Email: [email protected] Web: www.epholding.cz

Concept Daniel Častvaj, Eva Kokešová, Petr Choutka, Kristína Málková, Magdaléna Selingerová, David Židlický

Graphic design and layout Milena Havlíčková, Marcela Schneiberková, Zdeněk Tuka / Atelier Zidlicky

Photos Joel Saget / AFP (Page 7) EP Cargo (Page 34) Archive Plzeňská teplárenská (Page 69) Archive Locon (Page 78) Archive Nadácia EPH ( Pages 215, 221 ) David Židlický

Maps Map of Europe with Countries – Single Color by FreeVectorMaps.com Copyright © Free Vector Maps.com

Editorial Deadline 31 October 2020